A corporate restructuring and bankruptcy BLOG

    Grand Salame, Making a Statement, Many Happy Returns, and Going Yardi

    What's News
    May 31, 2024

    Below is our initial take on recent bankruptcy-related developments:

    Ex-FTX Executive Salame Sentenced to 7.5 Years in Prison | Reuters

    Former co-CEO of bankrupt cryptocurrency exchange FTX’s Bahamian subsidiary has been sentenced to 90 months in prison after pleading guilty in September to making tens of millions of dollars in illegal campaign donations to increase causes encouraged by FTX founder Sam Bankman-Fried.  

    S&K Take:While this is far from the biggest news in the criminal arena over the last 24 hours, it is an interesting piece related to the FTX debacle that hopefully winds up for customers in the near term. Salame was convicted of making illegal political contributions as well as operating an unlicensed money transmitter business. The sentence is longer than what was requested by prosecutors, so the Judge must have been unhappy with the defendants conduct or demeanor. Salame also had to pay back $5.5 million in ill-gotten gains.

    Law Firm Says Texas Judge Wanted 'Untruthful' Statement About Lawyer Romance | Reuters

    U.S. law firm Jackson Walker was asked by former Texas bankruptcy Judge David Jones to make a “potentially misleading or untruthful” statement to diminish his romantic ties with one of the firm’s partners, Elizabeth Freeman, a relationship that prompted his resignation.

    S&K Take: More twists and turns, and facts we learn, deep in the heart of Texas. Sorry about that. Anyway, this is a hair over a week old, so not quite in our window, but we will let it slide. This revelation was included in a pleading in the Sorrento case, although it is getting pretty hard to keep track of the procedural jockeying over the multiple cases. News comes out in dribs and drabs, although nothing earth shattering, nor have there been any huge decisions. We will stay tuned, of course, as will the vast majority of restructuring professionals.  

    Gemini Customers Get Back Over $2 billion in Crypto from Genesis Bankruptcy | Reuters

    Bankrupt crypto lender Genesis and crypto exchange Gemini have repaid over $2 billion in crypto to 232,000 customers offering them a 242 percent return on assets locked up since January 2023. Genesis was able to return customer’s crypto to them instead of liquidating a narrow pool of assets and repaying them in cash.

    S&K Take: Genesis is wasting no time in returning crypto to customers under its confirmed plan, and the Winklevii rejoice. Certainly, a success story of a case, in large part due to the increase in value of crypto, but the hat must be tipped to the Debtors for a job very well done.  

    WeWork Cleared to Exit Bankruptcy and Slash $4 Billion in Debt | Reuters

    On Thursday, WeWork’s Chapter 11 bankruptcy plan was approved by U.S. Bankruptcy Judge John Sherwood, permitting the company to cancel out $4 billion in debt and give equity over to the shared office space provider’s group of lenders and real estate technology company Yardi Systems.

    S&K Take: Another successful case came to what looks like an end yesterday. There is still some clean up left to do on the landlord side of the equation, but the Debtors were able to get $4 billion in secured debt to agree to take ownership of the company at a valuation somewhere in the $700 million range. Adam Neumann, the former owner, had been challenging the plan and the equitization of the debt, although the Debtors managed to cut a deal to secure peace. The lenders and Yardi (aka Cupar Grimmond) will see if they can right the ship with a streamlined balance sheet.  

    The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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