Celebrity-Backed Bankrupt Carbon Credit Seller Arranges Financing Amid Fraud Charges Against Co-Founder
Despite boasting Cindy Crawford as an investor and Meta as a client, Aspiration Partners faced challenges securing chapter 11 funding
Aspiration Partners, a climate-finance startup backed by celebrities like Cindy Crawford and Robert Downey Jr., has lined up proposed funding to stay afloat in chapter 11 after federal prosecutors charged a co-founder with fraud.
The San Francisco-based company, which has brokered carbon-credit deals with companies including Microsoft and Meta Platforms, failed to secure a lender after contacting roughly two dozen lenders and existing investors, including junior creditor Oaktree Capital Management, chief restructuring officer Miles Staglik said in a filing Monday in the U.S. Bankruptcy Court in Wilmington, Del.
Secured bondholder Inherent Group eventually agreed to lead a group to provide $18 million in financing, which includes $4.2 million in new money for the company now known as CTN Holdings or Catona, he said.
The climate-finance company partners with project developers worldwide, providing investment, project monitoring and other services to help them generate carbon credits. CTN then sells the carbon credits to its customers.
CTN sought protection from creditors Sunday with roughly $170 million in debt. It plans to look for a buyer for its assets, but the pool of potential purchasers might be small due to “significant capital outlays and risks associated with the business, as well as the long-time horizon for realizing a return,” Staglik said. CTN also faces “substantial” shareholder and trade litigation, he said in the filing.
The company had been receiving financing from entities affiliated with co-founder Joseph Sanberg. That source of funding dried up in February. In early March, Sanberg was arrested after the Justice Department filed a criminal complaint alleging that he conspired to defraud two investor funds of at least $145 million.
Staglik said he doesn’t believe the allegations implicate CTN in any criminal activity. He emphasized that current management and employees were unaware of the alleged misconduct and that the business itself is a victim. Sanberg no longer holds any positions at the company and is no longer involved in its operations, but the criminal case has hurt its ability to raise capital to operate, he said.
Sanberg’s defense lawyer, Marc Mukasey, said his client has pleaded not guilty to the charges. “We will buckle down and defend him with vigor and zeal,” Mukasey said in a statement on Tuesday.
The National Basketball Association’s Los Angeles Clippers are one of CTN’s biggest unsecured creditors, owed $30 million for both trade debt and carbon credits.
CTN is represented by law firm Whiteford, Taylor & Preston.
The case, numbered 25-10603, has been assigned to Judge Thomas Horan.