In a preliminary objection filed Friday in Delaware bankruptcy court, Timberline Holdings III LLC and other investors argued that the releases are being provided without any independent investigation or payment to the debtor's estate.
"These gratuitous releases do not provide any benefit to the debtor's creditors or equity holders, but rather inure solely to the benefit of the debtor's existing officers and directors," the shareholders wrote.
They instead called for the removal of the releases and for the creation of an independent oversight committee of investors.
Joonko hit Chapter 11 in May, saying its business had rested almost entirely on fraudulent claims made by former CEO Ilit Raz.
Joonko's board of directors discovered in June 2023 that Raz had doctored much of the company's business and financial records, an attorney representing the company said at a hearing in May this year.
The lawyer said Raz admitted to the board before resigning that she committed fraud. An investigation found she had been falsifying business records for the previous year, and that Joonko had only a "small fraction" of the customers the board and its investors thought it had, the attorney added.
Federal prosecutors charged Raz with one count of securities fraud and one count of wire fraud in June, accusing her of deceiving shareholders into dumping $27 million into the AI-powered hiring platform.
The government alleged that between February 2021 and June 2023, Raz presented investors with falsified financial statements and lists of clients that didn't exist to secure millions of dollars of investment in the business.
The bankruptcy case is In re: Joonko Diversity Inc., case number 1:24-bk-11007, in the U.S. Bankruptcy Court for the District of Delaware.
--Additional reporting by Rick Archer and Jessica Corso. Editing by Covey Son.
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