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Test case looms for companies seeking US bankruptcy protection

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Test case looms for companies seeking US bankruptcy protection

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On a Sunday afternoon about a year ago, a partner at a major Texas law firm walked into a suburban Houston UPS Store. There she set up a post office box for a California-based pharmaceuticals company.

The seemingly unremarkable errand is now at the centre of a legal controversy over just how much leeway companies have in shopping for the best place to file for bankruptcy protection.

Scintilla Pharmaceuticals and its larger parent, Sorrento Therapeutics, used the UPS Store PO box to together file for Chapter 11 bankruptcy in a Houston federal court just 10 hours later.

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The Houston federal bankruptcy court had become a hotbed for complicated cases as its judges were considered sophisticated and speedy arbiters of the law but also friendly to the wishes of debtors. Houston was so attractive to debtors and their lawyers that even the likes of Sorrento with a reed-thin nexus to Texas were determined to get in.

Sorrento’s reorganisation was eventually approved by the court after a messy fight between the company and various creditors. Its emergence from Chapter 11 is mere weeks away. But this month, the origins of its Texas mailing address have suddenly drawn the interest of the US Department of Justice.

The DoJ’s bankruptcy court affiliate, the Office of the US Trustee, in a court filing now argues that Sorrento deployed “an abusive venue manufacturing scheme” to improperly land in Houston.

The controversy is the latest in a string of incidents that demonstrate the aggressive legal advice that law firms are deploying to win business where top partners can charge above $2,000 an hour.

The Sorrento dust-up comes also amid a broader scandal that has engulfed the Houston federal bankruptcy court. Its chief judge David R Jones resigned in October after admitting an undisclosed, long-standing romantic relationship with a lawyer who appeared frequently in cases he oversaw. Prior to his departure, Jones had overseen the Sorrento case. The fallout from the scandal is now a forensic examination into the at-times ruthless way big bankruptcy gets done in America.

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“Law is supposed to be a profession with an ethical foundation, not just trying to check the technical boxes, but to practise those values,” said Melissa Jacoby, a law professor at the University of North Carolina. “At stake is more than the reputation of these firms, but the legitimacy of the system overall.”

The US trustee motion came just two weeks after an individual claimant in the case, Timothy Culberson, filed his own motion to move or dismiss the Sorrento case. The postal box had been included in the original bankruptcy petition from February 2023. But what made Culberson’s filing suddenly explosive were the physical receipts from the UPS Store he collected showing that the box was opened just 10 hours before the overnight bankruptcy filing.

A lawyer from the Texas firm Jackson Walker had paid the fees with a credit card. The bankruptcy code states that a company must be in the district for 180 days prior to the filing. Culberson has asked the court to claw back the $2mn in fees paid to Jackson Walker and the $26mn paid to Sorrento’s primary counsel, the international powerhouse Latham & Watkins.

In response to the motion from the US trustee and Culberson, Sorrento, Latham and Jackson filed a response denying any wrongdoing. Their primary defence states that since Scintilla was designated as a “non-operating entity”, the mailbox along with a Texas bank account with a $60,000 deposit opened three days before the bankruptcy was enough to satisfy the letter, if not the spirit, of the bankruptcy code. Sorrento and its lawyers tartly suggested that those unhappy with its tactics take their grievance to the US Congress.

As it happens, Jackson Walker’s credibility as a law firm is already in question. Judge Jones’s secret romantic partner was a Jackson Walker lawyer. The US trustee is seeking to reverse more than $13mn in fees the firm was paid in about two dozen cases where it failed to disclose the relationship to the bankruptcy court. Jackson has denied wrongdoing and is contesting those efforts.

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In the meantime, Sorrento’s remarkable position — that any company can file for bankruptcy far afield from their headquarters, operations or legal domicile by merely opening a bank account and PO box immediately before the moment it completes its court petition — will now be litigated.

sujeet.indap@ft.com

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Video: Welcome to Rennie Harris’s Dance Floor

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Video: Welcome to Rennie Harris’s Dance Floor

new video loaded: Welcome to Rennie Harris’s Dance Floor

The acclaimed hip-hop choreographer Rennie Harris’s production “American Street Dancer” brought Detroit Jit, Chicago Footwork and Philly GQ to the stage. We invited cast members to showcase the three street dance styles.

By Chevaz Clarke and Vincent Tullo

January 5, 2026

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Trial begins for officer accused of failing to protect children during Uvalde shooting

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Trial begins for officer accused of failing to protect children during Uvalde shooting

Flowers and candles are placed around crosses to honor the victims killed in a school shooting, May 28, 2022, outside Robb Elementary School in Uvalde, Texas.

Jae C. Hong/AP


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Jae C. Hong/AP

CORPUS CHRISTI, Texas — One of the first police officers to respond to the 2022 school shooting in Uvalde, Texas, goes on trial Monday on charges that he failed to protect children during the attack, when authorities waited more than an hour to confront the gunman.

Adrian Gonzales, a former Uvalde schools officer, faces 29 counts of child abandonment or endangerment in a rare prosecution of an officer accused of not doing more to stop a crime and protect lives.

The teenage gunman killed 19 students and two teachers at Robb Elementary in one of deadliest school shootings in U.S. history.

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Nearly 400 officers from state, local and federal law enforcement agencies responded to the school, but 77 minutes passed from the time authorities arrived until a tactical team breached the classroom and killed the shooter, Salvador Ramos. An investigation later showed that Ramos was obsessed with violence and notoriety in the months leading up to the attack.

Gonzales and former Uvalde schools police chief Pete Arredondo were among the first on the scene, and they are the only two officers to face criminal charges over the slow response. Arredondo’s trial has not yet been scheduled.

The charges against Gonzales carry up to two years in prison if he is convicted. The trial, which is expected to last up to three weeks, begins with jury selection.

Gonzales pleaded not guilty. His attorney has said Gonzales tried to save children that day.

Police and Texas Gov. Greg Abbott initially said swift law enforcement action killed Ramos and saved lives. But that version quickly unraveled as families described begging police to go into the building and 911 calls emerged from students pleading for help.

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The indictment alleges Gonzales placed children in “imminent danger” of injury or death by failing to engage, distract or delay the shooter and by not following his active shooter training. The allegations also say he did not advance toward the gunfire despite hearing shots and being told where the shooter was.

State and federal reviews of the shooting cited cascading problems in law enforcement training, communication, leadership and technology, and questioned why officers waited so long.

According to the state review, Gonzales told investigators that once police realized there were students still sitting in other classrooms, he helped evacuate them.

Some family members of the victims have said more officers should be indicted.

“They all waited and allowed children and teachers to die,” said Velma Lisa Duran, whose sister Irma Garcia was one of the two teachers who were killed.

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Prosecutors will likely face a high bar to win a conviction. Juries are often reluctant to convict law enforcement officers for inaction, as seen after the Parkland, Florida, school massacre in 2018.

Sheriff’s deputy Scot Peterson was charged with failing to confront the shooter in that attack. It was the first such prosecution in the U.S. for an on-campus shooting, and Peterson was acquitted by a jury in 2023.

At the request of Gonzales’ attorneys, the trial was moved about 200 miles (320 kilometers) southeast to Corpus Christi. They argued Gonzales could not receive a fair trial in Uvalde, and prosecutors did not object.

Uvalde, a town of 15,000, still has several prominent reminders of the shooting. Robb Elementary is closed but still stands, and a memorial of 21 crosses and flower sits near the school sign. Another memorial sits at the downtown plaza fountain, and murals depicting several victims can still be seen on the walls of several buildings.

Jesse Rizo, whose 9-year-old niece Jackie was one of the students killed, said even with three-hour drive to Corpus Christi, the family would like to have someone attend the trial every day.

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“It’s important that the jury see that Jackie had a big, strong family,” Rizo said.

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Cuba says 32 Cuban fighters killed in US raids on Venezuela

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Cuba says 32 Cuban fighters killed in US raids on Venezuela

Havana declares two days of mourning for the Cubans killed in US operation to abduct Nicolas Maduro.

Cuba has announced the death of 32 ⁠of its ​citizens during the United States military operation to abduct and detain Venezuelan President Nicolas Maduro and his wife in Caracas.

Havana said on Sunday that there would be two days of mourning on ‌January 5 and ‌6 in ⁠honour of those killed and that ‌funeral arrangements would be announced.

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The state-run Prensa Latina agency said the Cuban “fighters” were killed while “carrying out missions” on behalf of the country’s military, at the request of the Venezuelan government.

The agency said the slain Cubans “fell in direct combat against the attackers or as a result of the bombing of the facilities” after offering “fierce resistance”.

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Cuba is a close ally of Venezuela’s government, and has sent military and police forces to assist in operations in the Latin American country for years.

Maduro and his wife have been flown to New York following the US operation to face prosecution on drug-related charges. The 63-year-old Venezuelan leader is due to appear in court on Monday.

He has previously denied criminal involvement.

Images of Maduro blindfolded and handcuffed by US forces have stunned Venezuelans.

Venezuelan Minister of Defence General Vladimir Padrino said on state television that the US attack killed soldiers, civilians and a “large part” of Maduro’s security detail “in cold blood”.

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Venezuela’s armed forces have been activated to guarantee sovereignty, he said.

‘A lot of Cubans’ killed

US President Donald Trump, speaking to reporters on board Air Force One on Sunday, said that “there was a lot of death on the other side” during the raids.

He said that “a lot of Cubans” were killed and that there was “no death on our side”.

Trump went on to threaten Colombian President Gustavo Petro, saying that a US military operation in the country sounded “good” to him.

But he suggested that a US military intervention in Cuba is unlikely, because the island appears to be ready to fall on its own.

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“Cuba is ready to fall. Cuba looks like it’s ready to fall. I don’t know how they, if they can, hold that, but Cuba now has no income. They got all of their income from Venezuela, from the Venezuelan oil,” Trump said.

“They’re not getting any of it. Cuba literally is ready to fall. And you have a lot of great Cuban Americans that are going to be very happy about this.”

The US attack on Venezuela marked the most controversial intervention in Latin America since the invasion of Panama 37 years ago.

The Trump administration has described Maduro’s abduction as a law-enforcement mission to force him to face US criminal charges filed in 2020, including “narco-terrorism” conspiracy.

But Trump also said that US oil companies needed “total access” to the country’s vast reserves and suggested that an influx of Venezuelan immigrants to the US also factored into the decision to abduct Maduro.

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While many Western nations oppose Maduro, there were many calls for the US to respect international law, and questions arose over the legality of abducting a foreign head of state.

Left-leaning regional leaders, including those of Brazil, Colombia, Chile and Mexico, have largely denounced Maduro’s removal, while countries with right-wing governments, from Argentina to Ecuador, have largely welcomed it.

The United Nations Security Council plans to meet on Monday to discuss the attack. Russia and China, both major backers of Venezuela, have criticised the US.

Beijing on Sunday insisted that the safety of Maduro and his wife be a priority, and called on the US to “stop toppling the government of Venezuela”, calling the attack a “clear violation of international law“.

Moscow also said it was “extremely concerned” about the abduction of Maduro and his wife, and condemned what it called an “act of armed aggression” against Venezuela by the US.

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