Below is our initial take on recent bankruptcy-related developments:
A group of Revlon shareholders asked a bankruptcy judge to appoint an official committee to represent them, as the group feels that their interests are not being protected in bankruptcy proceedings.
S&K Take: Shares of REV are currently trading north of $6, so the marketplace seems to think that equity has some value, which is reminiscent of the Hertz case, where the debtors at one point tried to raise capital through an equity offering during the case (which never took off). Whether this is a meme stock scenario or whether real value exists remains to be seen, but it is notable regardless.
Endo International, a pharmaceutical manufacturer facing thousands of lawsuits in relation to the opioid crisis, is now in negotiations with senior leaders with the expectation that they will agree to file for Chapter 11 bankruptcy.
S&K Take: It appears as though another significant opioid case is on the precipice of filing. Endo has about $8 billion in debt to deal with in addition to opioid claims. The filing would not be without controversy, of course, as a group of unsecured noteholders has organized arguing that the company has no need to file, and a bankruptcy will only damage the business. This one should unfold in the very near term.
The latest crypto-related company to file for bankruptcy is German crypto exchange Nuri, which filed in a Berlin court and ensured their customers that they would still have access to their funds and accounts.
After suspending withdrawals in June, CoinFLEX is now seeking approval from creditors to begin its restructuring process.
S&K Take: Two new crypto-related insolvencies, although they seem to be quite different. The Nuri proceeding, unlike others in the US and abroad, is promising the return of customers’ cryptoassets and cash. It looks like Nuri had a true custodial relationship with its customers, unlike Voyager and Celsius. CoinFLEX, on the other hand, seems like the more typical case, where the platform is short on crypto for customers.
Blockchain payments company Ripple Labs has sustained continued growth throughout the crypto meltdown and has now begun inquiries into acquiring Celsius, the crypto lender which filed for bankruptcy in July.
S&K Take: Interest in the assets of the company is good for Celsius customers, although we are a long way from understanding what a sale transaction would look like.
3M Co, the parent company of allegedly inadequate military earplugs, has asked a federal judge to allow its plan, putting their subsidiary into bankruptcy in order to move hearing damage claims into bankruptcy court, to move forward without interference.
S&K Take: This case is fascinating, as claimants in federal court litigation are seeking to preempt the bankruptcy court from issuing a stay of the prosecution of their claims. This marks a new strategy in the mass tort bankruptcy playbook. This might have some legs depending on how the federal judge overseeing the litigation feels about the filing. The debtors had some criticism of the litigation process at the first day hearing, so will that impact an impending decision? Grab your popcorn.