%1

Texas-based factoring company Genesis Network Telecom filed for bankruptcy liquidation on Wednesday, FreightWaves.com reported. Genesis Networks Telecom Services LLC, also known as Genesis ATS (GNET), headquartered in San Antonio, filed its petition in the U.S. Bankruptcy Court for the Western District of Texas. Founded in 2005, the company offered financing solutions for small and midsize companies. It lists its assets as up to $50,000 and its liabilities as between $100 million and $500 million, according to the petition filed Wednesday. Genesis Funding, which states on its website that it’s a “one-stop shop for fast financing,” has up to 49 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees. FedEx Supply Chain Logistics of Carrollton, Texas, and Arris Solutions Inc. of Austin, Texas, are listed as creditors, although no amounts are listed in the bare-bones petition. According to court documents, GNET, which was founded by James Goodman, has been involved in a number of lawsuits over the past three years, including a chapter 7 filing involving one of its affiliates, Arris Solutions Inc. The suit, filed by FedEx against GNET in October 2023, alleges the company engaged in a “protracted and multifaceted scheme to defraud the company of more than $67 million dollars.” Tina Younts is listed as the executive assistant on the bankruptcy petition. A creditors meeting has been set for March 19.

The U.S. Justice Department’s bankruptcy watchdog accused Sorrento Therapeutics lawyers of submitting false paperwork to justify the company’s chapter 11 filing in Houston, saying the mailbox location it cited as a principal place of business was created only hours ahead of its bankruptcy, WSJ Pro Bankruptcy reported. Kevin Epstein, the U.S. trustee for the Southern District of Texas, said that on Feb. 12, 2023, a lawyer for Sorrento rented a mailbox at a UPS in the Woodlands, a Houston suburb, on behalf of Scintilla Pharmaceuticals, a Sorrento subsidiary. Both Sorrento and Scintilla are based in San Diego. Scintilla wasn’t registered or licensed to do business in Texas, Epstein said. It had been dormant since about 2019, with no employees or business operations, and its only asset was a $60,000 bank balance that Sorrento had wired to it days before the bankruptcy filing, he said. Ten hours after establishing the mailbox, Scintilla filed its chapter 11 petition in the U.S. Bankruptcy Court in Houston stating that the mailbox was its principal place of business, while still listing its San Diego office as its mailing address, court records show. Sorrento, Scintilla’s parent company, then filed its own chapter 11 petition in Houston.

Disgraced cryptocurrency entrepreneur Do Kwon should be extradited to the U.S. to face trial on fraud charges, rather than to his native South Korea, a court in the tiny Balkan country of Montenegro has ruled, the Wall Street Journal reported. Kwon’s lawyers have three days to appeal the ruling by the High Court in the Montenegrin capital of Podgorica, a spokeswoman for the court said Wednesday. The appeals court will have the final word in the case, she added. A local lawyer for Kwon, Goran Rodić, called the ruling illegal and pledged to appeal. Kwon, the creator of the failed TerraUSD and Luna cryptocurrencies, has previously denied committing fraud. Kwon has been at the center of a tug of war between the U.S. and South Korea ever since he was arrested in March 2023 at the Podgorica airport while attempting to board a private jet to Dubai with a fake Costa Rican passport. Both the U.S. and South Korea have sought to prosecute him on charges stemming from the May 2022 collapse of TerraUSD and Luna. The crash erased some $40 billion in value from the crypto markets, hurt thousands of investors worldwide and triggered a chain reaction that caused other digital-currency firms to topple into bankruptcy. Last year, federal prosecutors in New York charged Kwon with eight criminal counts of fraud. The Justice Department alleged that Kwon misled investors about the stability of TerraUSD, an algorithmic stablecoin that used financial engineering to maintain a value of $1 a coin. A Stanford University-educated entrepreneur, Kwon had hyped TerraUSD as the future of money and derided critics who called it potentially unstable. The Securities and Exchange Commission has also sued Kwon and his company, Terraform Labs, over securities fraud in a civil case stemming from the TerraUSD and Luna collapse. Lawyers for Terraform Labs have denied the SEC’s allegations. Read more. (Subscription required.)

Medical Properties Trust reported growing losses related to its largest tenant, Steward Health Care System, and said it lent the struggling hospital chain another $20 million, the Wall Street Journal reported. MPT, the nation’s largest hospital landlord, reported a fourth-quarter net loss of $664 million, or $1.11 per share, driven by $772 million of write-offs and other impairment charges mainly related to Steward, a Dallas-based hospital chain trying to stay out of bankruptcy. In a Jan. 4 update, MPT had said it expected to book about $350 million of write-downs related to Steward. In that same release, MPT said it had agreed to fund a new $60 million bridge loan for Steward and that Steward was $50 million behind on its rent. MPT in its press release this morning also detailed plans to raise cash through asset sales. Its shares were up 5% in morning trading. MPT’s comments about Steward will be closely watched in Massachusetts and other states where Steward has operations. Yesterday, Mass. Gov. Maura Healey sent Steward a letter demanding that it release its financial statements by Feb. 23. The last set of Steward financial results that were disclosed publicly was for 2020.

Vice Media, a one-time digital journalism sensation, will no longer publish stories and other content on its website, according to a memo sent to staff yesterday, Bloomberg News reported. The company, which emerged from bankruptcy court protection last year, is restructuring its business once again. Vice will transition to a studio model, distributing its content, including news, on other media platforms, with an emphasis on social media. “It is no longer cost-effective for us to distribute our digital content the way we have done previously,” Chief Executive Officer Bruce Dixon said in the memo. The company is continuing with plans to sell its female-focused website Refinery 29. Additional layoffs will occur, with employees notified in coming weeks. The business, which began as an alternative music and culture magazine in Montreal in the 1990s, raised capital from high-profile investors such as Walt Disney Co. and Fox Corp. before running into a slowdown in digital advertising spending. At its peak it was valued at $5.7 billion.

FTX founder Sam Bankman-Fried is expected to return to a New York courtroom Wednesday for a rare appearance since his November conviction over a multibillion-dollar fraud on cryptocurrency customers, Bloomberg News reported. Bankman-Fried is slated to answer questions from a federal judge as to whether he is aware of potential conflicts of interest for the lawyers he hired last month to represent him at sentencing on March 28. His new attorneys also represent another crypto mogul, former Celsius Network Ltd. Chief Executive Officer Alex Mashinsky. Earlier this month, prosecutors asked U.S. District Judge Lewis Kaplan to question Bankman-Fried about possible conflicts for attorneys Marc Mukasey and Torrey Young. The government wants to determine if Bankman-Fried is willing to waive his Sixth Amendment right to effective assistance of counsel, given the lawyers represent Mashinsky in a separate criminal case related to the collapse of Celsius. Bankman-Fried faces as long as 20 years in prison for the most serious charges for which he was convicted. Prosecutors noted Mashinsky has partially blamed Celsius’s bankruptcy on actions taken by Alameda Research, a hedge fund linked to Bankman-Fried’s FTX crypto exchange, and that the lawyers’ use of some records could be limited. When Celsius filed for bankruptcy in 2022, Alameda was among its top creditors, court filings show.

Cruise operator Hornblower has filed for bankruptcy, saying its overnight cruise business hasn’t rebounded from the COVID-19 pandemic, WSJ Pro Bankruptcy reported. Private-equity firm Strategic Value Partners, an existing Hornblower creditor, has agreed to acquire majority ownership of the business in a proposed debt-for-equity swap that is part of a larger restructuring agreement that requires approval from the U.S. Bankruptcy Court in Houston. SVP will also “provide a significant equity investment in the business,” Hornblower said in a statement. Private-equity firm Crestview Partners, which has been majority owner of the company, will keep a minority interest. SVP and Crestview also will provide $121 million in new-money financing. SVP will get four seats on a new five-person board, with Crestview getting the remaining one. Hornblower said the chapter 11 is expected to help cut the company’s debt load by $720 million. The company enters bankruptcy with assets of up to $1 billion, and liabilities of roughly $1.2 billion. Its debt load rose from $630 million in 2019 as the business tried to maintain liquidity during the pandemic.

The families of Sandy Hook school shooting victims voted overwhelmingly in favor of a plan to wrap up Alex Jones’ bankruptcy proceedings by liquidating the right wing talk show host’s assets, Bloomberg Law reported. Jones’ general unsecured creditors — comprised mostly of Sandy Hook families holding about $1.5 billion in defamation judgments against the famed conspiracy theorist — voted 100% in favor of a chapter 11 plan that would methodically liquidate and redistribute his property and cash, while preserving potential legal actions against parties affiliated with Jones and his Infowars program. An official committee appointed to represent Jones’ unsecured creditors notified the U.S. Bankruptcy Court for the Southern District of Texas on Feb. 16 that of 23 liquidation plan ballots distributed to creditors, it received 21 back — all supporting the committee’s liquidation proposal. The vote indicates the creditors’ preference over a competing plan submitted by Jones that would allow him to reorganize by preserving parts of his media empire and paying the group at least $5.5 million a year over 10 years. His plan would provide additional creditor recoveries out of disposable income from Jones’ bankrupt Infowars parent company, portions of Jones’ personal income, and the proceeds from selling various personal assets.

The U.S. Justice Department’s bankruptcy watchdog accused Sorrento Therapeutics lawyers of submitting false paperwork to justify the company’s chapter 11 filing in Houston, saying that the mailbox location it cited as a principal place of business was created only hours ahead of its bankruptcy, WSJ Pro Bankruptcy reported. Kevin Epstein, the U.S. trustee for the Southern District of Texas, said that on Feb. 12, 2023, a lawyer for Sorrento rented a mailbox at a UPS in the Woodlands, a Houston suburb, on behalf of Scintilla Pharmaceuticals, a Sorrento subsidiary. Both Sorrento and Scintilla are based in San Diego. Scintilla wasn’t registered or licensed to do business in Texas, Epstein said. It had been dormant since about 2019, with no employees or business operations, and its only asset was a $60,000 bank balance that Sorrento had wired to it days before the bankruptcy filing, he said. Ten hours after establishing the mailbox, Scintilla filed its chapter 11 petition in the U.S. Bankruptcy Court in Houston stating that the mailbox was its principal place of business, while still listing its San Diego office as its mailing address, court records show. Sorrento, Scintilla’s parent company, then filed its own chapter 11 petition in Houston. The Scintilla petition was signed by Henry Ji, Sorrento’s chief executive, and Matthew Cavenaugh, a partner at the Texas law firm Jackson Walker. Veronica Polnick, another partner at Jackson Walker, rented the mailbox on behalf of Scintilla, Epstein said.

Radio and podcast company Audacy Inc. received court approval on Tuesday to emerge from bankruptcy and hand ownership to creditors including Soros Fund Management, Bloomberg News reported. Audacy — the second-largest radio broadcaster in the US — will slash nearly $1.7 billion of debt from its balance sheet through its restructuring plan, according to court papers. Existing shareholders will be wiped out while high-ranking creditors, including the investment firm founded by billionaire George Soros, will be repaid with stock in the restructured company. Audacy’s bankruptcy plan was unanimously approved by the company’s senior lenders, according to Caroline Reckler, an attorney with Latham & Watkins who represents the company. A single shareholder objected to the plan during the court hearing on Tuesday, arguing that liquidating the company would provide a better recovery for equity holders. Despite the shareholder objection, Bankruptcy Judge Chris Lopez approved the proposal during the hearing in Houston. “The liquidation analysis shows that the value never gets to equity,” he said.