WorldVentures: Verona Sale and Liquidating Trust

Spherature Investments LLC, the parent entity behind the WorldVentures travel-club business, filed chapter 11 petitions in the Eastern District of Texas on December 21, 2020, alongside affiliated debtors. The filing followed years of operational and regulatory pressure on a multi-level marketing enterprise that had grown to more than 60,000 independent sales representatives across the Americas, Asia, Europe, and Africa. The court ordered joint administration of the seven debtor entities on December 30, 2020. The case moved through contested cash collateral disputes, a bidding procedures process, and four plan amendments before the court confirmed a liquidating trust plan tied to a sale transaction to Verona International Holdings on November 12, 2021.

The confirmed plan split estate value between sale proceeds and retained litigation assets through a two-tier liquidating trust structure. Creditors with general unsecured claims received beneficial interests in the trust, while sales representative claims were divided into opt-out and non-opt-out subclasses with distinct treatment paths. The case remains in post-confirmation administration under Liquidating Trustee Joseph M. Coleman, with more than twenty adversary proceedings filed by the trust, an IRS dispute over employee retention credits and tax liability determinations, a creditor motion for relief from the plan injunction resolved by stipulated order, and a claims objection deadline extended to June 2026.

Debtor(s)	Spherature Investments LLC (7 jointly administered entities)
Court	U.S. Bankruptcy Court, Eastern District of Texas
Case Number	20-42492
Petition Date	December 21, 2020
Judge	Hon. Brenda T. Rhoades
Confirmation Date	November 12, 2021

WorldVentures' Business Model and Path to chapter 11

Spherature Investments operated the WorldVentures brand, a multi-level marketing travel enterprise that sold DreamTrips memberships — curated travel and leisure experiences — along with travel packages, representative business system fees, and promotional materials through its independent sales representative network. By the time of filing, more than 1.3 million travelers had purchased DreamTrips experiences. The company employed 105 people globally, including 85 employees tied to the petition entities, and maintained operations across the U.S., Canada, Europe, and Asia. Board governance consisted of Wayne T. Nugent, James Calandra, and Russell Nelms as directors. Michael Poates served as chief operating officer.

The First Day Declaration filed by Erik Toth attributed the chapter 11 filing to multiple operational failures rather than a single liquidity event. The debtors cited rapid growth without adequate internal controls, a flawed commission structure that created unsustainable payout obligations, exploitation by bad actors within the representative network, and aggressive marketing in unauthorized markets. Credit-card theft and fraudulent bookings added further financial strain, alongside regulatory investigations and fines from multiple jurisdictions. The declaration framed the filing as the cumulative result of years of mismanagement compounded by external shocks rather than a sudden collapse.

A class action filed in May 2017 in California Superior Court (Case No. BC659422) alleged that WorldVentures operated an illegal pyramid scheme, claiming that representatives were rewarded for recruiting others rather than for travel package sales. That litigation was transferred to federal court in Texas (Case No. 17-cv-2155), stayed pending arbitration in September 2018, and reopened in October 2019 after an arbitrator dismissed the case, finding that the arbitration agreement was illusory. The class action was automatically stayed again when the debtors filed chapter 11 in December 2020.

The Seacret arrangement. The declaration described a prepetition Limited Solicitation Agreement (LSA) with Seacret Direct, LLC that weakened the debtor's distribution network. Under the LSA, Seacret was contractually entitled to a maximum royalty of $12 million based on product sales and was prohibited from directly soliciting members, employees, suppliers, or vendors. The arrangement nonetheless allowed migration of WorldVentures sales representatives to Seacret and waived non-compete protections.

On March 5, 2021, the debtors initiated adversary proceedings against Seacret Direct alleging tortious interference, fiduciary breach, trademark infringement, conversion, misappropriation, and constructive fraud, claiming that Seacret infiltrated and attempted to steal the debtor's downline organization and planned to establish a competing travel business. The complaint sought damages of at least $100 million. Montgomery Capital Advisers, LLC served as collateral agent for a group of secured noteholders and was identified as a key prepetition creditor.

COVID-19 impact. The declaration also cited the loss of global travel demand during the pandemic. Revenue from travel memberships and packages, the company's primary product line, stopped when international and domestic travel restrictions took effect. COO Michael Poates stated that "the impact of the COVID-19 pandemic has caused significant financial distress to our travel and leisure business" and framed the chapter 11 filing as a path to profitability. The pandemic shock hit simultaneously with the operational and governance failures already eroding the business, eliminating any remaining runway for an out-of-court restructuring.

Capital Structure and Cash Collateral Disputes

The First Day Declaration reported that the debtors entered chapter 11 with secured notes carrying an aggregate principal balance of approximately $5.5 million at a 16% annual interest rate. Those obligations were secured by liens on substantially all debtor assets and by a lien on Wayne and Susan Nugent's 2016 federal income tax refund. The debtors also reported ~$6.5 million in Paycheck Protection Program funding across five legal entities and approximately $5.2 million owed to majority owner Wayne Nugent for unpaid commissions and business expense reimbursements in November 2020.

The case did not proceed through a conventional DIP financing facility. Instead, early chapter 11 operations depended on repeated cash collateral orders negotiated between the debtors and Montgomery Capital. The court entered a first interim cash collateral order on December 30, 2020, days after the petition date, authorizing the debtors to use cash collateral on an interim basis. The debtors filed a revised proposed cash collateral order the same day, reflecting ongoing negotiation over budget terms and adequate protection concessions.

Montgomery Capital objected that its cash collateral should not be used without additional adequate protection, arguing for replacement liens, superpriority claims, and protections beyond what the debtors proposed. Montgomery's objection challenged the budgeting assumptions and demanded that any continued use of collateral proceeds be conditioned on enforceable protections for its secured position. The dispute over adequate protection and cash collateral budgeting continued through October 2021, with hearing agendas still listing cash collateral matters alongside settlement issues involving Montgomery well into the plan confirmation timeline.

Bidding procedures. On January 21, 2021, the debtors filed a motion to approve bidding procedures for the sale of substantially all assets, signaling that the case was tracking toward a sale-linked restructuring rather than a standalone reorganization. The motion sought authorization for a stalking horse bidder, bid protections, and a sale hearing schedule, laying the groundwork for the transaction that would ultimately be incorporated into the confirmed plan.

Plan Structure and Liquidating Trust

The debtors filed the Fourth Amended Joint chapter 11 Plan on September 23, 2021, alongside a disclosure statement outlining the liquidating trust and sale transaction structure. The disclosure statement framed confirmation as the best available alternative to maximize estate value and avoid the delay and cost of chapter 7 liquidation. It highlighted voting and treatment for Montgomery Capital's secured claim, other secured claims, convenience claims, general unsecured claims, sales representative claims, virtual currency claims, and subordinated claims. The confirmed plan established the following class treatment:

Priority and secured claims. Class 1 priority non-tax claims were to be paid in full. Class 3 other secured claims were to receive payment in full or alternative secured treatment consistent with section 1129 requirements. Montgomery Capital's Class 2 secured claim received specific treatment tied to the plan's sale proceeds allocation.

General unsecured claims. Class 5 general unsecured creditors received beneficial interests in the liquidating trust, with recovery dependent on trust asset monetization and retained cause of action proceeds.

Sales representative claims. Class 6 claims were split into non-opt-out and opt-out subclasses. The non-opt-out group was entitled to future compensation and partial legacy compensation from the purchaser, plus Tier II trust interests. The opt-out subclass received different treatment under the sale transaction documentation.

Equity interests. Existing equity was left with only residual value after all senior classes were paid in full.

The plan established the liquidating trust on the effective date, vesting excluded assets and retained causes of action in the trust. Trust value was divided between Tier I interests backed by sale transaction proceeds and Tier II interests tied to retained litigation and recovery assets. The liquidating trustee was tasked with administering trust assets, reconciling claims, retaining professionals, pursuing retained causes of action, and making distributions. The plan and confirmation order also included release, exculpation, and injunction provisions that the court treated as part of the overall settlement architecture.

Confirmation timeline. The voting deadline was October 8, 2021, the objection deadline was October 14, 2021, and the confirmation hearing commenced on October 29, 2021 and continued through November 5, 2021. The court found that the debtors satisfied sections 1129(a) and 1129(b), overruled unresolved objections, and approved the liquidating trust and sale-linked plan structure. The notice of confirmation and effective date was filed on November 17, 2021. Later compliance filings reference November 21, 2021 as the stated plan effective date, distinguishing it from the November 12 confirmation order entry date.

Sale Transaction and Verona International

On June 3, 2021, the debtors announced a binding agreement valued at $82.5 million with Verona International Holdings as reorganization sponsor. The deal included repayment of pre-bankruptcy sales representative commissions and continuity of the WorldVentures and DreamTrips brands. Verona described itself as experienced in acquiring and restructuring bankrupt companies in the travel industry. The confirmation order incorporated this sale transaction, transferring operating assets to Verona while excluded assets and retained causes of action remained with the liquidating trust.

DreamTrips International. Through its wholly owned subsidiary DreamTrips, LLC d/b/a DreamTrips International, Verona acquired exclusive worldwide rights to sell DreamTrips. The subsidiary committed to repay up to $22.25 million in past-due commissions owed to WorldVentures sales representatives, with payments beginning in January 2022, and to honor up to $7 million in virtual currency held by representatives and members. Mark Smith was appointed CEO of the network-marketing division, and Tammy Smith was appointed Chief Field Officer; both were described as industry veterans who had generated nearly $3 billion in global sales.

HFG-CAP supplement. The plan also included an HFG-CAP supplement, which provided HFG Capital Investments, LLC with an alternative election mechanism. Under the HFG-CAP provisions, HFG Capital could elect to consummate a modified transaction structure and assume responsibility for certain post-confirmation obligations.

A certificate of compliance filed by HFG Capital in 2025 confirmed that the plan's merger, combination, and acquisition requirements under the HFG-CAP supplement were satisfied. The merger involved SILLC(D) Acquisition Corp. merging with Envoy Technologies, Inc., with HFG receiving $250,000 in cash and 2.5% of the surviving corporation's outstanding common stock. Plan Shares were distributed to HFG and Class 6 claims holders in full settlement of their claims.

The plan and confirmation materials included release, exculpation, and injunction provisions. The Direct Selling Self-Regulatory Council subsequently administratively closed an inquiry into WorldVentures Marketing, noting that the company had ceased operations and that the court ruled the asset purchaser was not a successor to the debtor's liabilities.

Post-Confirmation Trust Administration

The Spherature Liquidating Trust is administered by Liquidating Trustee Joseph M. Coleman. A certificate of compliance filed post-effective date confirmed the plan's merger and acquisition requirements were satisfied.

Asset shortfalls. The trustee has reported that initial asset projections at confirmation were overstated. The Seacret royalty was projected at $12.38 million but has produced far less. A Verona royalty earn-out was projected at approximately $15.05 million but has realized less than $150,000. These shortfalls have increased the relative importance of litigation recoveries to the trust's overall distribution capacity.

Active litigation. The trust has filed more than twenty adversary proceedings to recover assets for creditors. The most significant is the Whiskey Papa litigation (Coleman v. Mike Lima Fox Inc. et al, Adversary Proceeding 22-04079), where the court entered a judgment order in November 2024 and subsequently granted the trustee's motion for attorneys' fees, prejudgment interest, and postjudgment interest in January 2025, bringing the total award above $4.87 million. The defendants filed an amended notice of appeal in February 2025, and the appeal remains pending.

Additional adversary proceedings target entities and individuals including Open Access BPO, The 709 Agency, Chilling the Most LLC, Double Your Profits LP, Guided Planet LLC, Amazon Web Services, Phelps Dunbar LLP, and former insiders. The Nugent litigation (Spherature Investments LLC et al v. Nugent, Adversary Proceeding 21-04120) remains active, with a discovery deadline set for April 30, 2026 and mediation scheduled. The trust also initiated a separate adversary proceeding against Seacret Direct and a related adversary proceeding brought by Seacret against Nugent (Adversary Proceeding 21-04129).

Melody Yiru plan injunction motion. Creditor Melody Yiru filed a motion for relief from the plan injunction in September 2025, seeking authorization to pursue available insurance coverage related to prepetition claims against the debtors. The trustee objected, and the matter was resolved through a stipulated and agreed order entered on November 3, 2025, permitting Yiru to proceed against insurance while preserving the plan injunction as to other estate assets.

IRS dispute. The trustee filed two related motions in September 2025: a motion to determine tax liability of certain debtors and a motion to compel the IRS to turn over employee retention credit funds and enforce the confirmation order. The IRS objected to the tax liability determination in October 2025, and filed a separate objection in December 2025 to the turnover motion, disputing eligibility and asserting a lawful setoff of approximately $333,000.

The IRS also sought and received stays of deadlines during a lapse of appropriations. After multiple continuances, hearings on both the tax liability determination and IRS turnover motion are scheduled for April 21, 2026.

Claims reconciliation. The court granted an extension of the claims objection deadline to June 16, 2026, reflecting the ongoing complexity of claims reconciliation more than four years after the petition date.

Professional Retentions and Fee Awards

Final fee orders entered in January 2022 reflect the professional costs of the chapter 11 case through the effective date. The court approved Foley & Lardner's fees, Pachulski Stang Ziehl & Jones' fees, McDermott Will & Emery's compensation, and B. Riley's advisory fees in separate orders:

Foley & Lardner LLP (debtor counsel)	$2,533,278 in fees + $70,700 in expenses
McDermott Will & Emery LLP	$2,216,811 in compensation + $61,597 in expenses
Pachulski Stang Ziehl & Jones LLP (committee counsel)	$2,198,293 in compensation + $18,849 in expenses
B. Riley Advisory Services (committee financial advisor)	$431,216 in compensation + $32 in expenses

Total approved professional fees exceeded $7.3 million in compensation alone. The official committee of unsecured creditors was represented by Pachulski Stang Ziehl & Jones as counsel and B. Riley Advisory Services as financial advisor. The scale of professional fees relative to reported debtor assets underscores the complexity and duration of the prepetition negotiation period, the contested cash collateral disputes, the multi-party sale process, and the plan confirmation litigation.

Frequently Asked Questions

What happened to WorldVentures?

Spherature Investments LLC, the parent entity of the WorldVentures travel-club business, filed chapter 11 on December 21, 2020 in the Eastern District of Texas. The court ordered joint administration of seven affiliated debtor entities and confirmed a liquidating trust plan on November 12, 2021. The business assets were sold to Verona International Holdings, with HFG Capital Investments later completing the plan's merger requirements. The Spherature Liquidating Trust continues to administer remaining assets and pursue litigation recoveries through more than twenty adversary proceedings.

Who is the claims agent for Spherature Investments?

Stretto serves as the claims and noticing agent. The firm maintains the official claims register and distributes case notifications to creditors and parties in interest.

What caused the WorldVentures bankruptcy?

The First Day Declaration attributed the filing to rapid growth without adequate controls, a flawed commission structure, exploitation by bad actors in the sales network, regulatory investigations, a destabilizing solicitation arrangement with Seacret Direct, and the loss of travel demand during the COVID-19 pandemic.

What is the Whiskey Papa litigation in the Spherature case?

The Whiskey Papa litigation (Coleman v. Mike Lima Fox Inc. et al, Adversary Proceeding 22-04079) is a fraudulent transfer action brought by the liquidating trustee. The court entered a judgment in November 2024 and subsequently awarded attorneys' fees, prejudgment interest, and postjudgment interest, bringing the total above $4.87 million. The defendants have appealed and the appeal remains pending.

What is the current status of the Spherature bankruptcy case?

The case is in post-confirmation liquidating trust administration under Trustee Joseph M. Coleman. Active matters include adversary proceedings against former insiders and third parties, a two-part dispute with the IRS over tax liability and employee retention credit turnover scheduled for hearing on April 21, 2026, a claims objection deadline of June 16, 2026, and the pending appeal of the Whiskey Papa judgment.

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