Climate startup Aspiration Partners Inc., now known as CTN Holdings, has filed for bankruptcy, just weeks after its co-founder was arrested and charged with fraud, as per Bloomberg.
The company, which previously boasted celebrity endorsements and arranged carbon credits for major corporations like Meta and Microsoft, is grappling with approximately $170 million in debt.
According to court filings, the primary goal of the bankruptcy is to facilitate a rapid sale of its assets in order to repay creditors. Chief Restructuring Officer Miles Staglik stated that the pool of potential buyers is limited, and the nature of CTN’s ventures will likely require significant capital and a “long-term horizon” to realize any value for creditors.
The bankruptcy filing occurred after co-founder Joseph Sanberg was charged by federal prosecutors with conspiring to defraud two investor funds of at least $145 million, according to a statement from the US Department of Justice earlier this month. Staglik, a managing director at CR3 Partners, hired as CTN’s restructuring advisor, emphasized that the charges relate to Sanberg’s personal conduct and do not implicate CTN or its affiliates in any criminal activity.
CTN and several affiliates, including Catona Climate Solutions, filed for Chapter 11 bankruptcy protection on Sunday night, outlining plans to borrow $4 million to fund the insolvency case. The company intends to hold an auction for its assets within the next 45 days, as indicated in court records.
Staglik asserted that the company’s current leadership and employees were unaware of, and are victims of, Sanberg’s alleged misconduct. He clarified that Sanberg “no longer holds any positions or roles with the Debtors and is no longer involved in any capacity with the Debtors’ operations.”
However, the criminal proceedings against Sanberg have “adversely impacted the Debtors’ ability to find replacement capital for immediate operational needs,” Staglik stated. Despite the challenges, CTN has secured Chapter 11 financing to fund its operations as it seeks to sell its assets.
Among CTN’s largest unsecured creditors are the National Basketball Association’s Los Angeles Clippers and the Kia Forum, both owned by Steven Ballmer. Aspiration’s backers included Ballmer, whose entities hold approximately $40 million in unsecured claims for “contracted carbon credits” and “carbon credit value,” as detailed in the bankruptcy petition.
