Below is our initial take on recent bankruptcy-related developments:
In a court filing on Wednesday, bankrupt crypto exchange FTX said that it wants to claw back nearly $4 billion in funds from similarly bankrupt Genesis Global Capital.
S&K Take: FTX seeks to file one of the biggest clawback claims to date against Genesis. This highlights an issue that is likely to permeate the crypto bankruptcy cases as they progress—interrelated litigation claims among the bankruptcy estates. FTX seems to be the most active to date, filing a claim against Voyager for $445 million (which could have an impact of 25% on Voyager creditor recoveries) and now putting Genesis on notice that it is seeking to recover a boatload of money. FTX has also indicated that BlockFi is a prospective target. It could take a long time to unwind this mess, and it remains to see which entities will be the ultimate beneficiaries of these claims.
Global news publisher and TV company that was once valued at nearly $6bn, Vice, is reportedly close to filing for bankruptcy. According to the New York Times, the company has been involved in sale talks with at least five companies in an attempt to avoid filing for bankruptcy.
S&K Take: How the mighty have fallen. Vice went from a $6 billion valuation to an internal valuation of $1.5 billion recently. Prospective purchasers are seeking to pick up the assets for less than $1 billion. The situation sounds fluid, although it looks like bankruptcy and a section 363 sale may be a fait accompli at this point. Vice is another (albeit indirect) victim of the SPAC craze, as a transaction that could have provided funding dried up a couple of years ago. Some very big names are involved here, including Fortress (according to the article) which funded some bridge financing not too long ago. No word on whether Logan Roy is a potential suitor (no spoilers, I am only on season 3).
Early Monday, regulators seized First Republic Bank, making it the second-largest bank failure in U.S. history, and promptly sold all of its deposits and most of its assets to JPMorgan Chase.
S&K Take: The hits in the banking sector keep on coming, with First Republic the latest victim. First Republic had a significant amount of uninsured deposits (i.e. those over the $250,000 FDIC limit), although the FDIC is stepping in to make sure everyone is covered. That will mean more losses for the FDIC fund, and word is FDIC will pass that pain on to the big banks through fees. JPM picks up the assets here in what sounds like a vigorous sale process. Who’s got next?
A federal judge ordered a new round of settlement talks between Johnson & Johnson and lawyers who rejected the company’s offer to pay $8.9 billion to end tens of thousands of cancer claims filed by people who used the company’s popular baby powder.
S&K Take: LTL 2.0 trucks on despite the impending motion to dismiss the case. The new and improved version of LTL 1.0 touts the support of thousands of creditors, although that support is clearly not universal. In an attempt to determine if the parties can somehow bridge the gap (seems unlikely but who knows), the parties were ordered to mediation. Guessing that the motion to dismiss the case is decided before mediation has any chance to get to a resolution, but I have been wrong before. This one is going to be fun to watch.