Below is our initial take on recent bankruptcy-related developments:
Silvergate, a Crypto focused lender, announced it will wind down its operations and voluntarily liquidate the bank. This announcement comes a week after Silvergate delayed its annual filing with the SEC, citing concerns with its ability to continue operations. The company shares plummeted after the news, dropping 97% since its November 2021 high.
S&K Take: The big news on the Street has been the contagion spreading through the banking sector. Twitter was on fire last night with news of a run on Silicon Valley Bank, with the latest news reporting that SVB sought a capital raise and failed and has pivoted to a sale. The FDIC is on the scene, and I imagine that this will be resolved in some way by the end of the weekend. The implications are huge, particularly in the venture capital world, where SVB thrived. Shares of other regional banks have plummeted as well, and rumors abound about their future. Let’s hope the contagion can be contained. As it stands, the crypto industry is losing its significant banking partners (Signature Bank seems to be the last man standing—for now), which is another element in the complete reshuffling of the industry.
Despite having an offer from asset manager NovaWulf, Bankrupt crypto lender Celsius Network confirmed this week that they will seek additional bids from other potential buyers.
S&K Take: Celsius was granted three more weeks to file their plan as they are apparently discussing a potential deal with a suitor other than the Wulf. No word on who that might be, but any bid is going to have to be a decent amount higher, as the NovaWulf bid is subject to about $20 million in bid protections. We will keep an eye on this as it unfolds. My hunch is that you’ll see us talk about this one in the next few weeks.
Bankrupt crypto lender Voyager Digital received approval from US Bankruptcy Judge Michael Wiles on its proposed restructuring plan. The plan centers on Voyager selling its assets and transferring its customers to Binance.US.
S&K Take: The Voyager saga inches closer to a conclusion, as Judge Wiles gave the SEC the Heisman on their objection to the transaction. The SEC, which is mired in a battle with other regulators and NY AG Letitia James (among others) to claim crypto regulation as their fiefdom, had alleged that Binance is operating in unregistered securities. The Court was not persuaded, essentially saying it was too little too late. The Binance deal still has some major hurdles to consummation, so this is not out of the woods yet by any means.
This week, Alex Jones’ media company Free Speech System filed its proposed reorganization plan in its Chapter 11 bankruptcy case. The proposal includes annual funds totaling $7M - $10M that would go to paying off creditors, as well as $520,000 going to Alex Jones annually.
S&K Take: These cases remain bizarre. Victims of Jones’s defamation have verdicts for over $1.5 billion in damages. This plan would propose to pay them (back of the envelope here) $35-$50 million. Jones would make $520k/year plus bonus potential. I am guessing that will not sit well with victims. Yes, you probably need Jones out there hawking his dietary supplements (I have to admit I am not sure who is buying diet pills from this guy) but given the massive haircut their claims are taking has to be a hard pill to swallow to see him pulling down that kind of bank. Not exactly minimum wage, although with inflation we are getting pretty close. While not exactly noteworthy from a bankruptcy law perspective, this one is enthralling, so expect more updates.