Below is our initial take on recent bankruptcy-related developments:
Crypto lender Celsius received approval from U.S. Bankruptcy Judge Martin Glenn to spend more than $5 million to construct a multi-million-dollar bitcoin mining facility which Celsius’ lawyers say could provide a way for the company to repay customers.
S&K Take: Celsius seems to have a more diversified business platform than Voyager, which could afford the Celsius debtors more flexibility in crafting a restructuring that satisfies its customers (which constitute the bulk of its creditor base). Obtaining court approval of these “critical vendor” payments related to the BTC mining business was important to improve that business line (at least according to the debtors) and seems like a positive step in the bankruptcy process.
Bankrupt crypto hedge fund Three Arrows Capital owes 27 different companies a total of $3.5 billion, but just one of those companies, Genesis, is owed $2.3 billion, more than 2/3 of the total debt owed by 3AC.
S&K Take: The 3AC liquidation proceedings in the BVI and Singapore are going to have a significant impact on the restructurings of its creditors, including Voyager Digital. Voyager had loaned about $650 million to 3AC and under the terms of the plan filed in its case, is offering some portion of the recovery on that loan to satisfy its customer’s claims. That recovery, however, seems dubious at best. Liquidators noted that they had $40 million in cash on hand, and this report suggests obligations could be in the $3.6 billion range. Also notable are other 3AC creditors. Both Blockchain.com and Genesis could face their own issues because of the 3AC situation, with Blockchain recently laying off a large percentage of employees. These could be the next dominos to fall.
Scandinavian airline SAS filed for bankruptcy protection two days into their pilot strike, which has now been resolved on the 15th day of the strike, costing the airline more than $145 million.
S&K Take: The SAS restructuring can now begin in earnest as the pilot dispute was a bottleneck for the case. The multi-billion dollar bankruptcy had taken a back seat in the news to other significant filings (including the recent crypto cases), but with the case set to move forward it will bear watching.
Madison Square Boys & Girls Club, which operates six youth centers in New York City, was granted a 90-day hiatus in its bankruptcy case, which will allow the youth club to devote their time to sexual abuse settlement talks.
S&K Take: The Madison Square Boys & Girls Club now has an agreed framework to move its case forward. The significant case constituents have agreed to mediate case issues and stay some aspects of the bankruptcy case to lessen the administrative burn in the case. MSBGC has asserted that it has limited funding for the case ($1.3 million which will be gone by September), so putting case activity on the back burner while parties try to strike a deal was likely best for all. Hopefully an agreement can be reached for the benefit of the CVA claimants so that they can put this behind them.