Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, February 24. In today's briefing, Dallas bankruptcy judge Stacey Jernigan has recused herself from the Highland Capital Management case to address bias allegations stemming from similarities between her novels and real-life court figures. And First Brands Group, unable to secure financing or a buyer for its overall operations, laid off employees after potential buyers withdrew or limited their bids to specific units, sources told The WSJ Pro Bankruptcy.

A Dallas bankruptcy judge has recused herself from overseeing the case of a hedge-fund manager to resolve allegations of bias around the similarities between her fictional novels and real-life people in her courtroom.

U.S. Bankruptcy Judge Stacey Jernigan agreed to recuse from any pending matters related to Highland Capital Management as a “corrective action” to certain problems raised in private complaints against her, according to several recent orders issued by the Judicial Council of the Fifth Circuit, which reviews allegations of misconduct against federal judges in Texas.

Highland’s co-founder and former chief executive, James Dondero, has sought since 2021 to disqualify Jernigan from overseeing Highland’s case, alleging she hasn’t been fair to him and that her side gig as a novelist revealed her bias. Her second book, “Hedging Death,” features a heroine who bears striking similarities to the author’s own life story—and a villain who Dondero alleged was patterned after him.

First Brands Group has been unable to find financing or a buyer to continue most of its companywide operations, the bankrupt auto-parts supplier said as it laid off employees in its aftermarket businesses Monday.

First Brands said in a letter to laid-off workers that several potential buyers for the company “suddenly and unexpectedly” withdrew or narrowed their bids to interest in certain units in recent days.

“While certain outside parties did ultimately decide to fund specific business lines, the company was unfortunately unable to receive any commitment to fund companywide operations,” said the letter, a copy of which was reviewed by WSJ Pro Bankruptcy.

The administrator winding down Do Kwon’s Terraform Labs has sued Jane Street, alleging that the high-speed trading giant engaged in insider trading to profit unlawfully from and ultimately hasten the crypto empire’s collapse.

Todd Snyder, the plan administrator appointed by a bankruptcy court, is seeking damages from Jane Street, its co-founder, Robert Granieri, and employees Bryce Pratt and Michael Huang.

In a heavily-redacted complaint, the administrator alleged Monday in Manhattan’s federal court that Jane Street used material nonpublic information from Terraform insiders to front-run trading that sped up Terraform’s demise.

AMC Entertainment narrowed its loss in the fourth quarter and said it feels increasingly optimistic about the year ahead, citing a strong slate of upcoming films.

The movie-theater operator reported a loss of $127.4 million, or 25 cents a share, for its three months ended Dec. 31. That is compared with a loss of $135.6 million, or 35 cents a share, in the same period last year. Stripping out certain one-time items, AMC posted an adjusted loss of 18 cents a share.

For the year, Chief Executive Adam Aron said the North American box office improved modestly compared with 2024. He added that AMC outperformed other movie-theater operators, growing revenue at a faster rate than the industry at large.

It doesn’t take much to cause tumultuous stock moves in a market top-heavy with tech shares and jumpy about the prospects for artificial intelligence.

But nothing underlines the sensitivity of stocks right now quite like what happened on Monday, when one of the factors behind the Dow’s 800-point drop was a 7,000-word hypothetical.

A viral report by Citrini Research tapped into a new strain of fears about AI, painting a dark portrait of a future in which technological change inspires a race to the bottom in white-collar knowledge work. Concerns of hyperscalers overspending are out. Worries of software-industry disruption don’t go far enough. The “global intelligence crisis” is about to hit.

The new, broader question: What if AI is so bullish for the economy that it is actually bearish?

Venture debt is flashing a warning sign. The proportion marked down at least 20%—a typical threshold for distress—grew to 24% from 9% between Q1 2021 and Q3 2025, according to market analytics firm MSCI.

The steep markdowns in the MSCI data, a lagging indicator, do not reflect recent downturns in software-company valuations. “It’s a big shoe that could drop,” said Patrick Warren, vice president of research and development at MSCI. 

The largest markdowns are in the healthcare sector, which makes up roughly a fifth of the venture-debt market, while Information technology shows below-average distress. But a rise in markdowns in IT wouldn’t be a surprise, according to Nicolas Sauvage, president of TDK Ventures. “As AI compresses the need for incremental headcount, some of these revenue assumptions weaken,” he said, “which naturally increases write-down pressure.”

—Jon Leckie

Financial-services providers are rushing to create private-credit benchmarks that can help investors better evaluate deal performance—and perhaps alleviate rising concerns about the health of the burgeoning direct-lending market.

Investment bank Lincoln International and market-metrics developer S&P Dow Jones Indices on Monday unveiled benchmarks jointly developed to track the performance of direct-lending deals in the U.S. and Europe.

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