Below is our initial take on recent bankruptcy-related developments:
Restaurant chain Buca di Beppo files for bankruptcy | Reuters
The Italian restaurant chain filed for Chapter 11 bankruptcy, citing assets between $0 to $50,000 and debts of $15 million to $50 million to at least 30 creditors. The filing follows the closure of 13 underperforming locations.
S&K Take: Buca de Beppo becomes the latest restaurant chain to succumb to distress, filing in the Northern District of Texas. The 44-restaurant chain cited many of the same issues as others before it—Red Lobster, World of Beer, Rubio’s and Tijuana Flats among them—less traffic, rising food and labor costs and staffing challenges. The case itself is seemingly unremarkable. Prepetition lender putting in a DIP and rolling up its prepetition debt at a 2:1 ratio, with the Debtors rejecting 12 leases for locations that were closed prepetition. I imagine this will not be the last chain bankruptcy that we see this year.
Genesis completes restructuring, begins distribution of $4B to creditors | Banking Dive
Genesis Global began distributing around $4 billion in digital assets and cash to creditors as part of its restructuring process after bankruptcy. This follows the establishment of a $70 million litigation fund to pursue legal action against third parties, including the corporate parent Digital Currency Group.
S&K Take: Genesis has commenced distributing assets under its plan. We have discussed the case in these pages a few times, but Genesis is making in kind distributions (as opposed to FTX which will be distributing in fiat). Customers have typically favored that approach. While they are receiving fewer coins than they held as of the petition date, those coins have drastically increased in value (although they have recently moderated slightly). A well-funded litigation trust will try to make up the difference for customers.
SunPower files for Chapter 11 bankruptcy, sells assets | Reuters
The residential solar provider is undergoing bankruptcy proceedings and agreed to sell some assets for $45 million in cash to Complete Solaria. SunPower valued its assets and liabilities to be between $1 billion and $10 billion and the company plans to continue selling its assets under Section 363 of the U.S. Bankruptcy Code.
S&K Take: One of the larger cases to have filed recently, SunPower hit the docket in Delaware. SunPower had sold off its manufacturing and commercial business in the years prior to bankruptcy, focusing on residential installation and financing of residential solar units. With rising inflation and interest rates, installing solar panels became less attractive to the average homeowner, not an entirely crazy premise. The Debtors chalk the bankruptcy up to those issues, and plan to sell their assets throughout the course of the case.
Judge approves SVB parent bankruptcy plan | Banking Dive
SVB Financial Group, the former owner of the defunct Silicon Valley Bank, received approval from the Bankruptcy Court for the Southern District of New York to distribute its remaining assets to creditors. However, the fate of approximately $1.93 billion in deposits held by the FDIC since the bank's failure was left undecided.
S&K Take: Judge Glenn approved the SVB Financial Group’s plan, a monumental achievement given the complexity of the case. The decision, however, leaves the $1.9 billion gorilla lurking in the room, int eh form of the FDIC. The FDIC seized the money during the course of the bank’s failure, and seems intent on keeping that as the cost of doing business. SVB Financial argues that the FDIC should remit the funds as it committed to supporting “all deposits” during the failure. I am not doing this justice, so I apologize, but we try to keep it light here. That issue will be decided in California court at some point in the future.
