All items from Bankruptcy Beat

Republic of Texas Brands Inc., which exited Chapter 11 bankruptcy protection earlier this month, is blazing a new trail in Texas.
The company plans to change its name to Totally Hemp Crazy and complete a merger with Chill Texas Inc., the distributor of a cannabis-based energy drink made in Austria.
“The completion of the acquisition is in process and will be completed before the end of the month,” Tom Shuman, a 30-year veteran of the beverage industry and the company’s new chief executive, said in a statement Tuesday.
The new name reflects the company’s renewed focus on THC-free, cannabis-based beverages like its Chillo energy drink, which promises consumers “a whole new feeling of being alive.”

Posted 5 weeks 5 days ago

Energy Future Holdings Corp. is terminating the restructuring support agreement it brought with it when it filed for Chapter 11 bankruptcy in April and making plans for an auction, according to a Thursday filing with the Securities and Exchange Commission. Read the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
A federal grand jury indicted TelexFree LLC co-founders and owners James Merrill and Carlos Wanzeler Wednesday on fraud charges tied to allegations that their company operated a massive pyramid scheme. The DBR article is available on WSJ.
The state of Florida has filed a lawsuit against former executives of Digital Domain Media Group Inc., saying the movie-special-effects company was essentially a Ponzi scheme that defrauded the state out of more than $80 million in job-creation grants. Read the DBR article via WSJ.

Posted 5 weeks 5 days ago

In this Sept. 7, 2012, file photo, Joe Francis attends the House of Hype Music Awards at the Beverly Hills Hotel in Beverly Hills, Calif.
Arnold Turner/Associated Press

Your move, Joe Francis.
A federal judge has slapped the Girls Gone Wild founder with a daily fine of $5,000 until he returns two luxury cars that belong to the porn business, whose famous brand was recently sold out of bankruptcy.
The fines, which started on Friday, came after Judge Sandra Klein didn’t buy Mr. Francis’s explanation for why he hasn’t returned the 2007 Cadillac Escalade or a 2012 Bentley Flying Spur.
Mr. Francis had said in court papers that he was “powerless” to return the autos after a Mexican strip club owner—angry that several Girls Gone Wild promotions fell through—took the vehicles.
Mr. Francis is appealing the sanctions. His attorney said in an email that the court decision is “outside the scope of proper civil contempt sanctions.”

Posted 5 weeks 6 days ago

In this July 27, 2009, photo, Scott Rothstein is shown in his former office.
Associated Press

More than four years after Scott Rothstein’s $1 billion-plus Ponzi scheme came to light, a bitter turf war between representatives of his fraud victims and his creditors has finally been resolved.
A recently reached settlement between federal prosecutors and bankruptcy officials should bring an end to a long-running fight over how to divvy up the fruits of Mr. Rothstein’s fraud among fraud victims and creditors of his now-defunct law firm.
Ever since Mr. Rothstein’s arrest and the bankruptcy filing of his Florida law firm in late 2009, prosecutors and bankruptcy lawyers have bickered over whether Mr. Rothstein’s luxury cars, watercraft, jewelry, cash, real estate and other assets were his personal property or property of the law firm.

Posted 5 weeks 6 days ago

A customer orders food at the Union Station location of Sbarro in Washington, D.C., in March.
Alex Wong/Getty Images

The family of a man shot to death while finishing his shift at a Little Rock, Ark., Sbarro store received a small measure of relief from the pizza chain’s bankruptcy judge on Monday.
Judge Martin Glenn of U.S. Bankruptcy Court in Manhattan lifted a provision of Sbarro’s bankruptcy-exit plan so the estate of the late Christian Ellis Hayes can go after the company’s liability insurance in an Arkansas lawsuit.

Posted 5 weeks 6 days ago


Two former Dewey & LeBoeuf LLP executives have settled a civil suit brought by the defunct firm’s bankruptcy trustee to recover nearly $22 million, according to a Tuesday court filing. Law Blog has the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
The Mt. Gox bankruptcy trustee said he would think about returning the company’s remaining bitcoins unconverted, The Wall Street Journal reports.

Posted 5 weeks 6 days ago

It’s not one of the multibillion-dollar settlements or multimillion-dollar jury awards designed to spur reform of such allegedly abusive mortgage-servicing practices as falsified court documents, improper fees and other misconduct. But a recent ruling from a Delaware judge is a step forward for people making a last stand in bankruptcy to hang on to their homes, one attorney says.
Judge Brendan Shannon of the U.S. Bankruptcy Court in Wilmington, Del., on Friday ordered Ocwen Loan Servicing LLC to pay the fees and costs of a Delaware couple’s bankruptcy on the grounds that Ocwen’s “unfounded and incorrect assertion” that they had defaulted on their mortgage loan was what drove them to seek court protection.
Richard J. and Mary Ann Williams were never materially behind on their mortgage payments, the judge said, but they were pushed into bankruptcy to keep Ocwen from taking their home in foreclosure.
“Basically, they were kicking two older people out of their home for no reason whatsoever other than they think they can get away with it,” was attorney Peter K. Schaeffer Jr.’s take on his clients’ plight. It still happens, even after a series of reforms designed to rein in abuses by mortgage lenders and loan services, he said.
“Ocwen is reviewing the court’s ruling to determine the company’s course of action,” said Margaret Popper, spokeswoman for the company.

Posted 6 weeks 7 hours ago

Four years after emerging from bankruptcy, CLEAR, a biometric identification service that allows customers to zip through security screenings, is preparing to open fast lanes in new airports across the country.
According to CLEAR President and Chief Financial Officer Ken Cornick, the Manhattan company, whose screening services are available at nine U.S. airports, will enter McCarran International Airport in Las Vegas, a hub for many conferences and conventions. The new lanes could open as soon as next month.

The move is expected to add 30 employees to CLEAR’s 230-employee roster, and the company is currently in talks to make its services available in Miami International Airport and Baltimore Washington International Airport.
“We are close to finalizing an agreement with CLEAR,” said Greg Chin, a spokesman for the Miami-Dade Aviation Department. “We expect an agreement to be in place in the coming months.”
An operator with BWI Airport couldn’t immediately be reached for comment Monday afternoon.
Keep reading the Daily Bankruptcy Review article here.
Write to Tom Corrigan at Follow him on Twitter at @TheTomCorrigan.

Posted 6 weeks 12 hours ago

Detroit pension holders approved the bankrupt city’s debt-cutting plan, which will dent their future benefits, The Wall Street Journal reports.
Momentive Performance Materials Inc. received bankruptcy-court approval to pay fees and enter an agreement associated with arranging $250 million in new bonds, which will be used to repay some of the quartz and silicone producer’s current bondholders. Read the Daily Bankruptcy Review article here.
(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click “try for free.”)
CIT Group Inc. reached a deal to buy OneWest Bank’s parent for $3.4 billion, WSJ reports.

Posted 6 weeks 14 hours ago

For-profit school company BioHealth College Inc., which operates four Bryman College campuses in California, has filed for Chapter 11 bankruptcy protection.
It wasn’t immediately clear Monday what would happen as a result of the Chapter 11 filing. However, a bankruptcy filing would usually result in the U.S. Department of Education revoking the schools’ status as an institution that can accept federal student financial aid dollars. Most colleges can’t survive without that funding.
BioHealth College acquired Everest College campuses in San Jose, San Francisco, Hayward and Los Angeles in January 2013 from Corinthian Colleges—a for-profit college operator with more than 100 schools that is now in the process of winding down its own operations—and changed the schools’ names to Bryman. Prior to this, BioHealth operated a for-profit medical-training school in San Jose.
Corinthian paid BioHealth $2.3 million in January 2013 to take over these schools, according to filings made with the U.S. Securities and Exchange Commission. The schools had been placed in “discontinued operations” the year prior, Corinthian Chief Financial Officer Bob Owen said in a conference call announcing the sale.

Posted 6 weeks 1 day ago