CTN Holdings: $20M Credit Bid Sale and Chapter 7 Conversion

CTN Holdings, Inc., the climate-finance company formerly known as Aspiration Partners, filed chapter 11 on March 30, 2025 in the U.S. Bankruptcy Court for the District of Delaware, opening a freefall case (No. 25-10603) under Judge Thomas M. Horan that was engineered from its first day around a single counterparty. The voluntary petitions covered seven jointly administered debtors and arrived roughly four weeks after the Department of Justice filed a criminal complaint against founder Joseph Sanberg, an event the debtors say cut off the capital infusions they had relied on to operate.

The filing set up a compressed, DIP-financed sale rather than a reorganization. Inherent Aspiration, LLC — already the largest prepetition secured noteholder — served as the sole debtor-in-possession lender, the stalking horse bidder, and ultimately the buyer through a $20 million credit bid that drew concentrated objections from the official creditors' committee and the U.S. Trustee. After the auction was cancelled for lack of competing bids and the sale closed, the cases converted to chapter 7 under a pre-negotiated settlement that preserved estate causes of action for unsecured creditors. Liquidity control, the sale process, and the post-sale wind-down all routed through that single secured party.

Debtor(s)	CTN Holdings, Inc., f/k/a Aspiration Partners (7 jointly administered entities)
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	25-10603
Petition Date	March 30, 2025
Judge	Hon. Thomas M. Horan
DIP Facility	Up to $25.215 million from Inherent Aspiration, LLC (12% per annum; $19.205 million prepetition roll-up)
Sale	$20 million credit bid by Inherent Aspiration, LLC (auction cancelled)
Conversion to Chapter 7	August 7, 2025
Claims Agent	Kurtzman Carson Consultants, LLC dba Verita Global

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Founder Fraud Complaint and the Liquidity Shock

The First Day Declaration of Chief Restructuring Officer Miles Staglik traces the filing to a sudden liquidity shock. After the Department of Justice filed a criminal complaint against founding investor Joseph Sanberg on February 28, 2025 over personal conduct alleged to have occurred between April 2020 and February 2023, entities related to Sanberg stopped making the capital infusions the debtors had depended on. The investor ceased funding in February 2025, the debtors could not secure replacement capital on a timely basis, and the resulting operational gap pushed the company into chapter 11 to preserve going-concern value through an expedited sale.

The declaration is careful to separate the company from its founder. It states that the allegations do not implicate the debtors in criminal activity, that current leadership and employees were unaware of the conduct, and it characterizes the debtors as "victims" of the investor's alleged conduct, noting that the investor "no longer holds any role or involvement with the Debtors." Sanberg pleaded guilty in August 2025 to a $248 million investor-fraud scheme, and the parallel SEC complaint detailed the conduct underlying the criminal case. The bankruptcy filing references the original February complaint as the operational trigger, and contemporaneous reporting on the filing framed the case as a fintech collapse following the founder's arrest. The fallout extended to civil investor suits: Serengeti Asset Management and affiliated funds sued Sanberg for over $20 million in fraud over stock-advance agreements whose collateral — Aspiration stock — became worthless following the bankruptcy, and investors filed an amended complaint against Aspiration Partners naming Steve Ballmer and BakerHostetler as defendants and alleging the company had misrepresented its financial solvency.

Climate Finance Model and the Seven-Debtor Group

The debtors operate a climate-finance business that connects enterprise customers with decarbonization plans to carbon-removal projects. They source and finance carbon projects globally — in the United States, Uganda, Kenya, and Brazil — provide project monitoring, technical assistance, and marketing, and sell the resulting carbon credits to enterprise clients. As of the petition date, the company disclosed a carbon-credit pipeline exceeding 100 million tons of carbon, with prior corporate partners that included large technology buyers.

The corporate group comprised seven jointly administered debtors led by holding company CTN Holdings, Inc., along with CTN SPV Holdings, LLC; Make Earth Green Again, LLC; Aspiration QFZ, LLC; Aspiration Fund Adviser, LLC; Catona Climate Solutions, LLC; and Zero Carbon Holdings, LLC. The First Day Declaration expressly excluded Catona Climate Foundation, a 501(c)(3) entity, from the wholly owned subsidiary list. One asset class shaped the sale debate: the debtors disclosed substantial tax-attribute carryforwards of approximately $580.3 million in federal net operating losses and approximately $251.2 million in state and local NOLs as of December 31, 2023, figures that the creditors' committee would later invoke in pressing for a longer marketing process.

Prepetition Capital Structure and Inherent's Secured Notes

The debtors estimated approximately $170 million in aggregate prepetition debt obligations at the petition date, layered across secured notes, subordinated debt, and unsecured trade claims. The largest tranche was approximately $61.5 million in outstanding prepetition secured notes issued under a Third Amended and Restated Senior Secured Promissory Note and Guaranty. Inherent Aspiration LLC, AGO Special Situations LP, Zion Consulting and Advisory LLC, and Mark Villanueva held the notes, with Inherent Group, LP serving as collateral agent and asserting valid, perfected liens on substantially all assets.

Beneath the secured notes sat approximately $49.8 million in subordinated debt, contractually junior to the secured note obligations and held by AGO Special Situations Credit, LP; AGO Special Situations II LP; Harmony Holdings, LLC; Lonsdale Group Limited; Long Live Bruce, LLC; and OCM Aspiration Holdings, LLC. The presence of Oaktree-affiliated OCM Aspiration Holdings in the subordinated layer drew outside attention, with trade coverage noting Oaktree's involvement across the credit stack. Unsecured trade and other obligations added approximately $55.6 million. On the equity side, the debtors reported 45,498,680 shares of common stock, 73,769,834 shares of preferred stock across various classes, and 22,625,741 warrants, options, and restricted stock units as of March 12, 2025, with identified holders including the secured noteholder group and Oaktree Capital Management LP.

DIP Financing and Inherent Aspiration's Triple Role

Inherent Aspiration, LLC occupied three roles at once: the largest prepetition secured noteholder, the sole DIP lender, and the stalking horse purchaser. Each step in the case was structured around that single counterparty's exposure. The debtors filed their DIP financing motion on March 31, 2025, the first business day after the petition, and obtained an interim order on April 3, 2025 authorizing initial draws and cash-collateral use. Law360 reported the interim approval the following day.

The original DIP motion priced the facility at 12% per annum and carried a $25,000 agent fee and a $90,000 commitment fee paid in kind, plus a $90,000 cash exit fee at maturity. It proposed an initial roll-up split of $1,175,000 at the interim order and $12,630,000 at the final order. A budget covenant in the DIP credit agreement limited negative variance in receipts and in aggregate cash operating disbursements (excluding professional fees) to 15% per testing period, allowing positive variance on one side to offset negative variance on the other, and made failure to satisfy case milestones by their specified deadlines an event of default.

The Final DIP Order, entered May 20, 2025, authorized an aggregate facility not to exceed $25,215,000. Of that, $18,030,000 of prepetition secured note obligations were rolled up on entry of the final order, bringing the total roll-up to $19,205,000 once the interim roll-up was included — a figure larger than the $12,630,000 final roll-up originally proposed. The order granted the DIP lender superpriority administrative-expense claims and priming liens subject to a professional-fee carve-out, and granted the prepetition secured parties adequate protection in the form of replacement liens and superpriority claims for any diminution in the value of their collateral. The debtors reached a creditor deal that cleared the path to final DIP approval.

Credit Bid Sale and the Cancelled Auction

The debtors filed their bidding procedures and stalking horse motion on April 11, 2025, naming Inherent Aspiration, LLC as stalking horse bidder. Inherent's bid was structured as a $20,000,000 credit bid under section 363(k), applied dollar-for-dollar against outstanding obligations under the prepetition secured loan facility and the DIP facility at the purchaser's discretion. The bid carried no cash component beyond payment of cure costs on assigned contracts, and it covered all or substantially all of the debtors' assets — contracts, leases, intellectual property, inventory, goodwill, permits, receivables, cash, and tangible personal property — while assuming only post-closing liabilities tied to the acquired assets and transferred employees. The proposed bid protections were a $600,000 break-up fee and a $400,000 expense-reimbursement cap. Bloomberg reported that the company had lined up the buyer within weeks of filing, and trade coverage tracked the $20 million stalking horse bid as it moved through the court.

The original schedule set a May 13 bid deadline, a May 15 auction, and a sale hearing on May 20 or 21. The Bidding Procedures Order entered May 14, 2025, after the court approved an extended sale timeline, and it approved the bid protections. No qualified competing bids materialized. The debtors cancelled the auction, designated Inherent the successful bidder, and the court entered the Sale Order on June 5, 2025 — a corrected and clean form of an initial order entered June 3 — authorizing the sale of substantially all assets free and clear and approving the related assumption and assignment of contracts. Inherent's designation right under the stalking horse agreement routed the post-closing buyer entity through Catona Solutions, LLC.

UCC and U.S. Trustee Objections to the Insider Sale

The architecture of an insider serving as lender, stalking horse, and buyer drew objections from both the official committee of unsecured creditors and the U.S. Trustee. The committee's omnibus objection, filed May 2, 2025, attacked the DIP and the sale procedures together. It called the roll-up "excessive," noting that roughly three dollars of prepetition debt would be rolled into the DIP for every dollar of new money advanced, and it opposed the additional $12,630,000 final roll-up that the final order ultimately enlarged to $18,030,000. The committee challenged advance waivers of sections 506(c) and 552(b) where the budget was insufficient, argued that its professional budget — less than 20% of the debtors' professional budget — left it unable to investigate the DIP lender's prepetition liens or to preserve avoidance actions and tort claims against the debtors' founders and officers, and asked for at least two additional weeks on the sale milestones to run a more robust marketing process given the debtors' significant NOLs.

The U.S. Trustee filed a separate objection to the bid protections. It argued that the break-up fee and expense reimbursement were not "actually necessary" to preserve estate value under the Third Circuit's O'Brien standard, reasoning that Inherent would have bid regardless because, as prepetition and DIP lender, it already had a vested interest in protecting its investment. The U.S. Trustee added that bid protections should not receive superpriority administrative status, that the roughly one-month timeline from bid-procedures approval to sale hearing was "unjustifiably truncated" against a record of no formal prepetition marketing, and that any overbid would simply pay down Inherent's own prepetition and DIP claims, undercutting the necessity rationale for the protections.

Settlement, Retained Assets, and Chapter 7 Conversion

The objections resolved into a negotiated compact rather than a contested sale hearing. The conversion motion, filed July 11, 2025, discloses that chapter 7 conversion was itself a pre-negotiated term of a settlement agreement among the debtors, the creditors' committee, and the DIP lender. The Sale Order carved out certain "Retained Assets" — causes of action and other reserved property — from the sale and preserved them for a chapter 7 trustee to administer for the benefit of unsecured creditors, addressing the committee's concern that estate claims against insiders would otherwise be lost.

Trees for the Future dispute. The debtors' carbon assets generated their own litigation. On May 23, 2025, the debtors moved to enforce the automatic stay against Trees for the Future over a 2022 program agreement to develop a carbon-offset project in Kenya into which the debtors had funded approximately $15 million over three years. The debtors alleged that Trees had begun soliciting new investors to replace debtor Catona Climate Solutions, commingle new investment, and dilute the debtors' ownership and management rights in violation of section 362(a)(3), and they sought an order barring further dilution.

Conversion and wind-down. The order converting the cases to chapter 7 was entered August 7, 2025, effective on entry. It approved a transition services agreement between buyer Catona Solutions, LLC and the debtors, made binding on the buyer, the estates, and any chapter 7 trustee, and set a deadline for final fee applications 45 days after the conversion date, on or about September 21, 2025. Law360 reported the conversion request, and trade coverage detailed the conversion following the asset sale.

Professionals. The debtors retained Whiteford, Taylor & Preston LLP as general bankruptcy counsel, CR3 Partners, LLC to supply the CRO and additional personnel, Hilco Corporate Finance, LLC as investment banker, and BDO USA, P.C. for accounting and tax work, with Kurtzman Carson Consultants, LLC dba Verita Global serving as claims and noticing agent. The official committee retained Dundon Advisors LLC as financial advisor.

Key Timeline

Date	Event
February 28, 2025	DOJ files criminal complaint against founder Joseph Sanberg
February 2025	Sanberg-related investor ceases capital infusions
March 30, 2025	Voluntary chapter 11 petitions filed (No. 25-10603, D. Del.)
March 31, 2025	DIP financing motion and First Day Declaration filed
April 3, 2025	Interim DIP and cash-collateral order entered
April 11, 2025	Stalking horse and bidding procedures motion filed
May 2, 2025	Creditors' committee objection to DIP and sale procedures
May 6, 2025	U.S. Trustee objection to stalking horse bid protections
May 14, 2025	Bidding Procedures Order entered
May 20, 2025	Final DIP and cash-collateral order entered
May 23, 2025	Motion to enforce automatic stay against Trees for the Future
June 5, 2025	Sale Order to Inherent Aspiration entered; auction cancelled
July 11, 2025	Motion to convert to chapter 7 filed
August 7, 2025	Order converting cases to chapter 7, effective on entry

Frequently Asked Questions

Why did CTN Holdings (Aspiration Partners) file for chapter 11?

The First Day Declaration attributes the filing to a liquidity shock after entities related to founder Joseph Sanberg stopped making capital infusions in February 2025, following a February 28, 2025 Department of Justice criminal complaint against Sanberg. Unable to secure replacement capital quickly, the debtors filed to preserve going-concern value through an expedited sale.

Who bought the assets of CTN Holdings?

Inherent Aspiration, LLC acquired substantially all of the debtors' assets through a $20 million credit bid under section 363(k). Inherent was also the largest prepetition secured noteholder and the sole DIP lender. The auction was cancelled after no qualified competing bids emerged, and the post-closing buyer entity operated as Catona Solutions, LLC.

What happened to the cases after the sale?

The cases converted to chapter 7 on August 7, 2025 under a settlement agreement among the debtors, the creditors' committee, and the DIP lender. The Sale Order preserved certain "Retained Assets," including causes of action, for a chapter 7 trustee to administer for unsecured creditors.

Who is the claims agent for CTN Holdings?

Kurtzman Carson Consultants, LLC dba Verita Global serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

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