Below is our initial take on recent bankruptcy-related developments:
In the past few weeks, the bankruptcy of Corizon, a prison health company, has been faced with questions from senators and a federal regulator regarding abusive bankruptcy tactics. The letter comes after the Judge David Jones, who serving as mediator in the bankruptcy settlement talks, resigned due to his affair with Houston bankruptcy attorney Elizabeth Freeman, who represented another Corizon successor company in the negotiations.
S&K Take: This may have flown under the radar, but there has been a developing story in the Southern District of Texas. One of the developments this week is in the Tehum bankruptcy case (a prison health care provider). Certain parties in are questioning a mediation over which Judge Jones presided. Senators Warren, Dick Durbin, and Bernie Sanders, among others, have also questioned the results of that case, mainly premised on the use of the ol’ Texas Two-Step. Glad to see that they certainly have the interests of victims in that case at heart. This is likely the tip of the iceberg and something we will be talking about for a while. One other tidbit is that the District Court sitting in the Western District of Texas will hear all cases filed against Judge Jones, including the two existing suits.
On Tuesday, crypto lender BlockFi came out of bankruptcy, stating that it will slow down functions and start returning crypto assets to customers nearly a year after it was damaged by the turmoil in the cryptocurrency industry amid the collapse of FTX.
S&K Take: The Effective Date of the BlockFi plan came about relatively quickly once the case constituents cut a deal, so kudos to getting this through. The basic premise of the plan is for the return of crypto on hand and the prosecution of litigation against other crypto platforms against which BlockFi may have claims. Generally comports with the paradigm in resolving this slew of crpto filings.
FTX, the bankrupt crypto exchange, is seeking millions of dollars in payments it had given to the Center for AI Safety (CAIS), a nonprofit artificial intelligence (AI) safety organization. In a bankruptcy court filing on October 25, the FTX’s attorneys asserted the firm gave $6.5 million to CAIS from May to September 2022, just a few months prior to the collapse and declaration of bankruptcy of FTX.
S&K Take: Not much to see here, but John Ray continues to look in the couch cushions for any and all payments that were made in the preference window. Seems like there were a few, with this $6.5 million payment likely on the smaller side of the universe.
Baby brand founded by actors Kristen Bell and Dax Shepard files for bankruptcy after being torpedoed by high shipping and production costs| Fortune
Hello Bello, a baby products company established by actors Kristen Bell and Dax Shepard, has filed for bankruptcy after it grappled to curb lofty shipping and production costs. The company is supported by VMG Partners, a private equity firm, and listed assets and liabilities of at the minimum $100 million each in its bankruptcy petition.
S&K Take: Is nothing sacred? If a celebrity-backed baby products company can’t make its way in the world today, what are we even doing? This is an interesting story, actually. The company had pretty solid sales ($180 million in revenue), mainly based on a deal to sell their products in Walmart. But they couldn’t make the numbers work as expenses increased wildly during the pandemic. The bankruptcy doesn’t look great, there is a stalking horse bid that may cover the secured debt and the DIP, so suppliers will likely feel the pain as in most retail cases. I am certainly not the first to say it, but maybe Dax and Kristen should have gone with a booze company instead.