Back in (the) Black Blog

The Celsius customer conundrum, Revlon liquidity, a different perspective on Boy Scouts, lunar liquidation and collateral damage in Voyager

Written by Robert J. Gayda | Aug 05, 2022

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

Revlon Gets Court Approval For $1.4 Billion Bankruptcy Loan | Reuters

After an objection by creditors claiming that the $1.4 billion loan could be an obstacle in their ability to recover any money from Revlon’s bankruptcy, a U.S. bankruptcy judge approved the loan citing the need for the cosmetics company to continue operations in bankruptcy.

S&K Take: An unsurprising result here. Revlon now has access to a significant DIP facility which should permit it to maintain business as usual.

Boy Scouts Near End of Bankruptcy, But Group Faces Challenges | Wall Street Journal

Last week, a bankruptcy court approved most of a $2.5 billion compensation plan that would resolve over 80,000 individual claims of sexual abuse against the Boy Scouts of America and would end the organization’s bankruptcy.

S&K Take: Interesting article in that it focuses on the future for Boy Scouts now that a plan has been confirmed, at least in part. It makes sense that trust needs to be rebuilt, and that will be a long row to hoe.

Space Company Masten Files for Bankruptcy After Struggle with NASA Moon Contract | CNBC

After receiving a $75 million NASA contract two years ago to bring transmission units to the moon, Masten Space Systems filed for Chapter 11 bankruptcy due to the extremely expensive and high-risk nature of the space industry.

S&K Take: This looks like a pretty bleak case for creditors, although the industry is certainly unique and interesting. The only real asset available to satisfy some significant debts is a NASA contract. Most of the creditors are industry players, so maybe high risk of low recovery is par for the course.

Bankrupt Crypto Lender Celsius Could Leave Customers Last in Line to Get Paid | Forbes

Since Celsius declared bankruptcy last month, the crypto lender’s customers have been blocked from accessing their funds. It remains to be seen how the bankruptcy court will classify Celsius users, but Celsius’ terms of service and court documents indicate that users will be treated as unsecured creditors.

S&K Take: The gauntlet has certainly been thrown by the debtors, clearly asserting that crypto held by Celsius is property of the bankruptcy estate. There appears to be significant sentiment on behalf of customers that they were materially misled, however, which may go to the validity of the user agreement. I would imagine that this will be a significant focus of the case, and could lead to a long and intense dust-up between customers and the debtors.

Voyager Bankruptcy Puts U.S. Pro Women’s Soccer Player Payouts at Risk: Report | Decrypt

In December of 2021, the U.S. National Women’s Soccer League partnered with Voyager Capital. Since then, Voyager has declared bankruptcy threatening the crypto payments promised to players as part of the Voyager sponsorship deal with the NWSL.

S&K Take: While unique claims, these looks like unsecured claims nonetheless. Customer issues will definitely be front-burner in these cases, so claims like these will probably receive little fanfare.