Earlier this year, just as the coronavirus pandemic was forcing much of the world into lockdown, the online marketplace Paddle8, which has been used by many nonprofits to conduct charity art auctions, filed for Chapter 11 Bankruptcy protection. That news came after one nonprofit sued to get back money that was allegedly owed to it, and in the months since more lawsuits have been filed against the organization and some of its key players.

Now, a new lawsuit has been filed in U.S. Bankruptcy Court, Southern District of New York, by the company’s Chapter 11 Bankruptcy trustee, Megan E. Noh, against an alleged former member of Paddle8’s board of directors, John Textor, and companies with which he has been affiliated. The suit alleges that he displayed “a reckless disregard for his duties” by putting the interests of his companies ahead of those of the stakeholders of Paddle8, which includes its creditors. The lawsuit is seeking $6 million in damages plus interest from Textor and $1 million in damages plus interest from the other companies named in the lawsuit.

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In an email to ARTnews, Textor said, “Neither I nor the companies mentioned have been involved in quite some time, though it is standard practice for a trustee to cast a wide net in filing speculative claims for recovery.”

In a statement sent to ARTnews, Noh said, “I continue to discharge my fiduciary duty to maximize the value of the bankruptcy estate of [Paddle8], using all rights and remedies available, including in connection with the allegations in our complaint.”

According to the lawsuit, Textor was elected to Paddle8’s board of directors in November 2019 through his role as a senior executive and director of a company called FaceBank (since renamed fuboTV Inc. and previously known as Pulse Evolution Group, Inc.). The suit says that FaceBank is wholly owned by a Swiss joint-stock company named FBAG (and previously doing business as Oakley Capital International AG).

In his email, Textor disputed the lawsuit’s claims that he was ever a director at Paddle8. “I was an employee of a lender that was also seeking recovery,” he said. “None of the parties named had any opportunity to influence the outcome at [Paddle8], which was certainly insolvent prior to our involvement. I expect the claims will be dropped in the very near term.”

In March 2019, according to the lawsuit, Oakley/FBAG lent Paddle8 $10 million. Ultimately, after various transactions, FaceBank owned 51 percent of Paddle8’s stock through one of its subsidiaries. While Textor was a board member of Paddle8, he was also “the individual having primary responsibility for FaceBank’s direct and indirect investment” in Paddle8, the lawsuit says. (Textor resigned from Paddle8’s board shortly before it filed a petition for bankruptcy protection, according to the suit.)

Noh was named a Trustee in the case at the beginning of May because all of Paddle8’s board members had resigned by early March 2020.

In the lawsuit, Noh alleges that, “as a result of the deteriorating financial results, [Paddle8’s] board of directors refused to approve a budget for the company for the year 2020.” By the beginning of the year, the lawsuit goes on to allege, Paddle8 had fallen behind on making payments to the organizations it had partnered with to sell charity auction items.

The lawsuit alleges that Textor “engaged in acts of gross mismanagement and disloyalty” that kept the company from paying its creditors, including not accessing a line of credit in order to does so, “because such courses of action were adverse to his personal financial interests.” It also accuses him of having “knowingly caused or permitted the misappropriation of funds generated from [Paddle8’s] online auctions and storefront sales, including charity auctions, to be used to pay the [company’s] operating expenses” instead of paying back nonprofits who were owed money.

In his email, Textor denied that allegation, saying, “We made it clear from the day we showed up that we wanted no collection of our secured debt, if artists and nonprofits had not first achieved full recovery. … We knew the charities relied on those funds more than we did, and we wanted to see a perfect resolution.”