Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Thursday, June 11. In today's briefing, JPMorgan Chase, Barclays, and Fifth Third secured a federal judge's dismissal of a fraud lawsuit brought by creditors of bankrupt subprime auto lender Tricolor, giving the firms an early victory in one of the disputes stemming from the lender's collapse. And Cygnus Capital, a preferred shareholder of QVC Group, is facing fierce opposition from creditors for disrupting the TV and online retailer's proposed bankruptcy plan in an alleged attempt to force a payout.

A federal judge dismissed a fraud lawsuit against JPMorgan Chase, Barclays and Fifth Third brought by creditors holding securitized notes issued by bankrupt subprime auto lender Tricolor.

U.S. District Judge Jed Rakoff on Wednesday granted the banks' motions to dismiss the case entirely, handing the firms an early victory in one of the disputes arising from Tricolor's collapse. Rakoff said a written opinion explaining the ruling would follow.

The lawsuit, filed by investment firms including One William Street Capital Management, Ellington Management Group and 400 Capital Management, alleged the banks ignored or failed to disclose warning signs of fraud at Tricolor before the lender's September 2025 bankruptcy.

Tricolor, specialized in auto loans for high-risk borrowers with limited credit histories, packaged those receivables into asset-backed securities before banks such as JPMorgan and Fifth Third helping underwrite them.

Because JPMorgan both underwrote Tricolor's securitizations and provided financing, noteholders questioned whether the bank had access to information unavailable to other creditors. The lawsuit stemmed from broader allegations that Tricolor engaged in widespread misconduct, including double-pledging collateral to multiple lenders. In December, former Tricolor Chief Executive Daniel Chu and former Chief Operating Officer David Goodgame were indicted in Manhattan on charges of defrauding lenders and investors. Both have pleaded not guilty.

—Samantha Kroontje

QVC Group’s preferred shareholder Cygnus Capital was criticized Wednesday for disrupting the proposed bankruptcy plan of the cable TV and online retailer.

At a U.S. Bankruptcy Court hearing in Houston, lawyer Robert Feinstein for the unsecured creditors committee, supporting QVC’s plan, said Cygnus was wasting time and money and trying “to create commotion” in hopes of securing a payout. Rewarding such “hyperaggressive behavior,” he said, would be inappropriate.

Feinstein said Cygnus acquired most of its stake after the bankruptcy filing and therefore knew the plan’s terms before objecting to them.

Cygnus is part of a preferred shareholder group holding roughly a third of the shares challenging the plan, arguing it improperly shifts value from preferred shareholders to creditors of the subsidiaries.

A lawyer for the group countered that no preferred shareholders support the plan. He also argued that the parent company’s committee effectively deferred to the subsidiary, declining to hire independent advisers because the outcome was “preordained.”

He added there was no meaningful investigation into directors and officers who approved intercompany transactions and objected to his clients being labeled “vultures.”

The preferred shareholder group, which says it was excluded from pre-bankruptcy negotiations, is seeking court permission to propose its own restructuring plan. “Please give us a seat at the table,” the lawyer said. “This is a travesty of justice.”

Cygnus couldn’t be reached for comment.

–Becky Yerak

A bankruptcy judge authorized YesCare to use $3.8 million to pay workers, despite creditor concerns that the prison healthcare provider’s cash could be diverted before reaching employees.

YesCare, which filed for chapter 11 in early May without securing bankruptcy financing, owes millions in unpaid wages.

An emergency hearing was held Wednesday after creditors raised objections to using limited liquidity for payroll, citing concerns about CHS Employee Group, the company handling YesCare’s payroll and allegedly owned by an insider with a history of siphoning funds.

The Justice Department’s bankruptcy watchdog said the employees continuing to work should be paid. “I’ve been getting emails and phone calls from all kinds of wage earners who are on the brink of bankruptcy here,” the U.S. trustee said.

A lawyer for YesCare said employees should expect to be paid by Friday.

—Akiko Matsuda

The judge overseeing the GWG chapter 11 case approved settlements totaling nearly $7 million between the post-bankruptcy litigation trust and two professional-services firms that advised the company.

The litigation trust was created after bondholders alleged that GWG management made material misrepresentations in marketing the company's debt securities and facilitated fraudulent financial transactions. The trust has since pursued claims against former directors and executives, as well as professional services firms that advised the company, reaching settlements with some of them.

Law firm Richards Layton & Finger, which served as GWG's Delaware counsel and also represented Beneficient, a firm that GWG became entangled with, in Delaware matters, agreed to pay $5 million to resolve potential claims brought by the trust. Beneficient's former chief executive, Brad Heppner, was convicted of fraud earlier this year.

Baker Tilly, which audited GWG in 2018 as the company pursued its merger with Beneficient, agreed to pay $1.9 million to settle claims identified by the trust. Houston bankruptcy judge Eduardo Rodriguez approved both settlements.

—Alexander Gladstone

An aluminum-rolling plant in upstate New York that supplies Ford Motor and other automakers will restart production Wednesday, nine months after a fire caused a supply crisis for the car industry, the plant’s owner said.

The Novelis plant in Oswego, N.Y., is the largest domestic supplier of aluminum sheet for the U.S. automotive industry. It serves about a dozen companies, including Ford, General Motors, Jeep and Ram parent Stellantis, as well as foreign automakers with U.S. production facilities.

A fire at the plant in September idled the rolling line where aluminum sheet is produced. Another fire in November caused additional damage to the rolling equipment and plant building. The thin aluminum sheets produced at the plant are later stamped into fenders, hoods and other exterior vehicle parts.

Year-over-year inflation hit a three-year high of 4.2% in May, as the Iran war pushed energy prices higher. Beyond the gas pump, though, there were fewer signs of quickly rising prices.

Consumer prices were up 4.2% in May from a year earlier, the Labor Department said Wednesday, accelerating from 3.8% the previous month.

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Alicia McElhaney; Becky Yerak. 

Follow us on Twitter: @gladstonea; @jodixu; @AskAkiko; @AliciaMcElhaney; @beckyyerak.