Below is our initial take on recent bankruptcy-related developments:
BlockFi’s Chapter 11 plan progresses with conditional court approval | Cointelegraph
United States Bankruptcy Court for the District of New Jersey recently conditionally approved Blockfi’s disclosure statement. If the bankruptcy plan receives approval, the lender aims to focus on recovering client funds.
S&K Take: Peace has broken out in one of the most hotly contested crypto cases, where the Debtors and the Committee have squared off for the last few months. Those parties were able to arrive at a settlement., and both issued a statement after approval of the Disclosure Statement urging creditors to vote in favor of the plan. The plan provides for the return of assets to customers, along with the waiver of preference claims under a $250,000 threshold.
J&J effort to resolve talc lawsuits in bankruptcy fails a second time | Reuters
Johnson & Johnson’s second attempt at bankruptcy has been shot down in court by U.S. Bankruptcy Judge Michael Kaplan.
S&K Take: Judge Kaplan dismissed LTL 2.0 last Friday as we were writing last week’s blog. So this news is a little bit dated, but wildly significant nonetheless. Judge Kaplan, who upheld the right of LTL to file in LTL 1.0, applied the Third Circuit’s “financial distress” standard, and held that LTL’s financial distress did not rise to the level required. With respect to this case, LTL has vowed to appeal the decision, so we will likely climb the appellate ladder in the next few weeks. From a broad perspective, the Texas Two-Step looks less viable by the day.
FTX releases restructuring plan, hints at rebooted offshore exchange | Cointelegraph
FTX released an outline of its intended restructuring plan that lays out the former exchange’s path to settle 13 different classes of claims. The classes of claims include specific brackets for FTX.com customers, FTX US customers and NFTs customer claims. The filing also includes the company’s plan to liquidate their estates and start an offshore exchange.
S&K Take: FTX fired the opening salvo in its sprawling cases, filing its first plan, and was immediately met by resistance from the UCC, which stated that they had provided comments to the Debtors which were not accepted or incorporated (or even addressed). Not a surprising give and take, and somewhat reminiscent of the BlockFi saga. As noted, this is really an opening bid for the parties to fight over, so we will be following this one as it evolves.
US asks Supreme Court to delay Purdue Pharma bankruptcy settlement | Reuters
The U.S. Department of Justice has recently asked the Supreme Court to intervene in Purdue Pharma’s bankruptcy settlement. The Office of the U.S. Trustee argues that the bankruptcy should not be allowed to proceed without review by the Supreme Court on legal protections for non-bankrupt entities.
S&K Take: The UST, denied a stay by the Second Circuit, has gone to the highest court in the land seeking to prohibit Purdue from implementing its plan. Purdue’s deadline to respond to that request from the UST is today. The Supreme Court’s decision could provide a clue as to whether the Court views third party releases as an issue they’d like to address.
