Below is our initial take on recent bankruptcy-related developments:
Creditor approval has been secured for a reorganization plan of the former crypto exchange, FTX. The plan is set to be presented to the bankruptcy court for confirmation on October 7th.
S&K Take: The FTX confirmation hearing is on the other side of this weekend. The Debtors have made significant strides in building consensus, getting the MDL plaintiffs and preferred equity on board over the last few weeks. The terms of the plan have not changed dramatically for customers, although the settlements that have rolled in have answered a lot of questions (particularly with respect to forfeiture proceeds). There are still dissenting claimants as well as the UST, who maintains an objection to the opt-out style releases included in the plan. That will be an interesting issue. Dedicated readers will recall last week’s blog discussing the recent Judge Goldblatt decision that effectively requires some sort of affirmative consent (as opposed to “consent” from creditors that don’t return ballots or are not entitled to vote). The Debtors address that issue directly and seek to distinguish the cases. According to the Debtors, in the Judge Goldblatt case, creditors only received notice of confirmation. In FTX, creditors have received notice of the plan on multiple occasions, including publication notice and otherwise. We will see if this creates a bit of nuance in Delaware law on opt-outs going forward. Stay tuned, we will surely cover the hearing next week.
After a failed $3.8 billion merger with JetBlue and losing 85% of its value this year, Spirit Airlines is in discussions with its bondholders about a possible bankruptcy filing.
S&K Take: It has been a minute, but Spirit is back in the news. The WSJ reported that the company was in talks with its bondholders regarding a restructuring, and that bankruptcy was in the mix. Spirit would need to deal with both its funded debt and its operational costs, so even if the company can cut a deal with the bonds bankruptcy might be necessary. Based on the report, it doesn’t sound like a filing is imminent, but shares dropped precipitously on the news regardless.
The Roman Catholic Diocese of Rockville Centre in Long Island, New York, announced a new bankruptcy settlement that would pay over $323 million to nearly 530 sexual abuse survivors who claimed they were abused by priests and other clergy members as children.
S&K Take: Rockville Center Diocese survivors got very good news this week, with a $323 million settlement in the works. The settlement is substantially larger than many predecessors. Back of the napkin, Diocese settlements had typically afforded survivors about $350,000 per claim, with the Rockville Center settlement registering at approximately $600,000 per claim. Additionally, the case had to address the Purdue release issue, creating a new settlement paradigm where the parishes themselves filed for bankruptcy and insurers bought policies back from the debtors.