Below is our initial take on recent bankruptcy-related developments:
A bankruptcy judge ordered a court-appointed examiner and an official committee of Celsius creditors to decide who will lead the investigation into whether Celsius could have operated as a Ponzi scheme.
S&K Take: The Celsius case has taken some wild twists and turns to date. A new wrinkle was just added with creditors inquiring as to whether Celsius was a Ponzi scheme. The court left the creditors’ committee and the examiner to confer on which will investigate this issue. If there was a finding that the case is a Ponzi, it could have a dramatic effect. The sale process would no longer an option, and a trustee would likely be put in place to collect and distribute assets. Those that received payouts in the case would likely be subject to clawback. Lots to come in this one.
Cineworld’s bankruptcy settlement with its landlords and lenders will allow the bankrupt movie theater chain to borrow $150 million and repay about $1 billion in debt.
S&K Take: Peace has (temporarily) broken out in the valley, allowing Cineworld to access the DIP financing that it has requested. The company settled a number of objections to the financing, including claims from a significant number of landlords. There is still a lot of wood to chop in the case, particularly with respect to the NCM litigation, but for the time being, this allows the case to move forward.
Some of Revlon’s creditors have accused lenders of exerting tremendous influence over the company’s bankruptcy proceedings based on “sham” loan transactions in 2019 and 2020.
S&K Take: This is a significant litigation. Certain Revlon creditors have taken issue with a loan transaction that purportedly provided certain lenders liens on valuable IP that other similarly situated lenders were not afforded. This transaction was one of a few notable transactions that sought to achieve a similar end. Several of these transactions have been challenged, but those challenges have been largely unsuccessful to date. It will be interesting to see how much traction this litigation gets, and whether it has any impact on the “creditors-on-creditor” violence that has become commonplace (and which could increase in a market downturn).
A union representing over 300 pilots in Chile voted to strike a day before the bankrupt South American carrier Latam Airlines was set to exit Chapter 11 proceedings.
S&K Take: LATAM can’t catch a break. On the precipice of bankruptcy exit, which has been a tough row to hoe, and a majority of their pilots strike. Remains to be seen what impact this has on the exit, but it is another hurdle in what has been an already difficult road.