Court Caps CashCall Insider Financing at $300K as Judgments Top $402M
ElevenFlo Research
July 25, 20267 min readUpdated September 8, 2026
CashCall, Inc. filed chapter 11 on July 20, 2026 in the U.S. Bankruptcy Court for the Southern District of California, listing more than $402 million in combined legal judgments against a company that reports under $10 million in assets. The subprime consumer lender has stopped originating loans, has no employees, and told the U.S. Trustee its only operating asset is a $1.5 million legacy loan portfolio still being collected from borrowers.
At the first-day hearing on July 24, Judge J. Barrett Marum authorized CashCall to draw only $300,000 of the $3.995 million debtor-in-possession facility it sought from an entity owned by the company's sole shareholder, deferring the balance and the contested committee-carve-out terms to a final hearing on August 26. The U.S. Trustee and the Consumer Financial Protection Bureau, one of the debtor's largest creditors, had both opposed the financing as an insider transaction requiring heightened scrutiny.
U.S. Bankruptcy Court, Southern District of California
Case Number
26-03102-JBM11
Petition Date
July 20, 2026
Judge
Hon. J. Barrett Marum
DIP Facility
$3,995,000 revolving commitment from Absolutely Zero Corporation (insider); $300,000 authorized on an interim basis
Case Snapshot
Judgments Exceed $400 Million Against a Non-Operating Estate
CashCall's petition follows two large unsecured judgments that together dwarf the estate's assets. Plaintiffs in the De la Torre consumer class litigation hold a claim of $245,515,389 against the company, according to the debtor's list of largest unsecured creditors filed with the petition. The CFPB separately holds a claim the debtor lists at $157,050,978, which the agency describes in its own court filing as exceeding $150 million and identifies as CashCall's second-largest creditor claim. The petition estimates total assets of only $1,000,001 to $10 million against liabilities of $100,000,001 to $500 million.
The CFPB's claim traces to a February 21, 2023 district-court judgment that found CashCall liable as the "true lender" in a tribal lending scheme that evaded state interest-rate caps, assessing a $22,992,378 civil penalty and $134,058,600 in restitution. The U.S. Supreme Court declined to hear CashCall's final appeal on March 2, 2026, leaving the judgment intact with more than $25 million in accrued post-judgment interest as of the petition date. Skadden, Arps, Slate, Meagher & Flom also holds an unsecured claim of $3,610,756.33 for prior legal work, according to the same petition exhibit.
The U.S. Trustee told the court that CashCall is not operating, has no employees, and is no longer making loans, leaving the $1.5 million legacy loan portfolio as the estate's only identified operating asset. The Trustee's filing also points to a potential fraudulent-transfer claim against sole shareholder J. Paul Reddam as a second estate asset, though that claim has not been litigated or valued.
Insider DIP Facility Draws Objections From the Trustee and CFPB
CashCall's proposed financing would come from Absolutely Zero Corporation, an entity the debtor's own term sheet identifies as a related party and insider, structured as a $3,995,000 revolving facility bearing interest at SOFR, stepping up two percentage points on default. The debtor sought $1.3 million of interim availability at the first-day hearing, with the remaining commitment contingent on a final order, and proposed a 13-week budget showing roughly $1.95 million in DIP inflows against $1,321,156 in payments to professionals, DIP interest, lender counsel, and U.S. Trustee fees.
The U.S. Trustee, appearing through Haeji Hong, argued the insider facility warranted heightened scrutiny and objected to proposed liens on the estate's avoidance-action claims, reimbursement of the lender's attorney fees from estate assets, and a carve-out structure that allotted $250,000 to professional fees but only $10,000 to a future creditors' committee. The Trustee countered with a $125,000/$125,000 split and said it was working to appoint an official committee of unsecured creditors. Debtor's counsel Schuyler Carroll and Patrick L. DuBois of Manatt, Phelps & Phillips defended the facility in a July 23 reply as necessary to fund the case and preserve estate assets.
The CFPB, represented by Christina Coll, separately opposed the DIP motion, citing its own security interest in a Pledged Account holding roughly $144 million and raising concerns about insider lending to a debtor it says has no ongoing business operations.
Court Caps Interim Borrowing at $300,000, Pushes Final Relief to August 26
At the July 24 hearing, Judge Marum granted the DIP financing and cash management motions only on an interim basis, capping the debtor's authorized borrowing at $300,000 — less than a quarter of the $1.3 million interim draw CashCall had requested. The court continued final hearings on the DIP financing, cash management, and lease-rejection motions to August 26, 2026 at 11:00 a.m., with oppositions due August 12 and replies due August 19. The court admitted the first-day declarations and exhibits into evidence without objection and directed debtor's counsel to submit interim orders approved as to form by the U.S. Trustee.
The court granted the debtor's motion to extend the deadline to file schedules of assets and liabilities and statements of financial affairs on a final basis, resolving that motion without carrying it to the August hearing. If the DIP facility is ultimately approved on a final basis, the term sheet sets a maturity date of December 31, 2026.
Lease Rejection and Other First-Day Relief Deferred
CashCall also sought emergency authority to reject an unexpired nonresidential lease with landlord Harmony Public Schools, represented by counsel Jason Adelstein, as part of its first-day package. Rather than rule on an emergency basis, the court declined immediate relief and continued the lease-rejection motion to the same August 26 final hearing as the DIP and cash-management matters.
The debtor's cash-management motion, also granted only on an interim basis, sought continued use of the company's existing bank accounts and a company Amex card pending a final order. A section 341 meeting of creditors is scheduled for August 28, 2026, and the court has set a chapter 11 status conference for September 10, 2026.
Key Timeline
The case docket shows the following milestones from the CFPB judgment through the scheduled September status conference.
Date
Event
Feb. 21, 2023
CFPB wins district-court judgment for $22,992,378 civil penalty and $134,058,600 restitution
March 2, 2026
U.S. Supreme Court declines to hear CashCall's appeal of the CFPB judgment
July 20, 2026
CashCall files chapter 11 petition and first-day motions, including $3,995,000 DIP request
July 22, 2026
U.S. Trustee files omnibus opposition to first-day motions
July 23, 2026
CFPB files opposition; debtor files reply in support of first-day motions
July 24, 2026
Court authorizes $300,000 interim DIP draw; continues DIP, cash management, and lease motions to Aug. 26
Aug. 12, 2026
Deadline for oppositions to final first-day relief
Aug. 19, 2026
Deadline for replies in support of final relief
Aug. 26, 2026
Final hearing on DIP financing, cash management, and lease rejection
Aug. 28, 2026
Section 341 meeting of creditors
Sept. 10, 2026
Chapter 11 status conference
Key Timeline
Frequently Asked Questions
Why did the court reduce CashCall's interim DIP borrowing from $1.3 million to $300,000?
The court's July 24 minutes granted the DIP motion only on an interim basis without stating detailed findings beyond authorizing the reduced $300,000 draw, and continued the remainder of the financing request to the August 26 final hearing after the U.S. Trustee and CFPB objected to the insider facility.
Who is providing CashCall's DIP financing?Absolutely Zero Corporation, an entity owned by sole shareholder J. Paul Reddam and identified in the debtor's own term sheet as a related-party insider.
What is CashCall's only operating asset?
A roughly $1.5 million portfolio of legacy consumer loans that the company is still collecting from borrowers, according to the U.S. Trustee's filing.
This article was researched and written with AI assistance, using court filings, public records, and news sources. AI-generated content can contain errors. Verify all information against primary sources before relying on it. This is not legal or financial advice. Read our full disclaimer.
