Below is our initial take on recent bankruptcy-related developments:
Celsius Networks, a crypto lending platform that has marketed itself as an alternative to the traditional banking model, does not offer its users any guarantee that their money is protected in the event of bankruptcy.
S&K Take: This one sounds like the Cred Inc. bankruptcy, which was a similar cryptoasset lending platform paying their customer-lenders exorbitant interest rates. The caption above is a little misleading as well – from our perspective, those customer-lenders are almost certainly unsecured creditors that are in significant peril of accepting cents on the dollar for their claims. This may be the tip of the iceberg in the crypto space when it comes to restructurings.
Electric Last Mile Solutions Inc, the electric vehicle maker, filed for Chapter 7 bankruptcy, following a disclosure that the SEC was investigating prior filings regarding compliance matters with Nasdaq’s listing rules.
S&K Take: This is anecdotal, but it seems like there have been more high-profile chapter 7s filing than there have been in recent memory. Hopefully not a trend, but have been hearing in the rumor mill that some of the forthcoming restructuring situations are similar – they will not be restructuring situations but instead liquidation situations. Could be a product of poor credit decisions made when chasing yield compounded by government handouts. Regardless, it will be interesting to see what this restructuring cycle looks like – and if there are more dire straits that cannot be salvaged than in years past.
Facing mounting debt and supply chain obstacles, Revlon now becomes the first major retailer to file for bankruptcy protection after a distressed business hiatus in the retail sector over the last two years.
S&K Take: Another billion-dollar bankruptcy for 2022. This one has been on the radar for a few years and has the interesting backdrop of the Citi-related mistaken repayment litigation. The issues will be legion, and it is mostly a free fall, so we will be talking about this one in these pages for some time to come I imagine.
A U.S. bankruptcy judge may side with plaintiffs and consider allowing some cases accusing Johnson & Johnson’s talc products of causing cancer to resume outside of the bankruptcy court.
S&K Take: This is going to be a good one. It appears Judge Kaplan is seriously considering allowing some claims to go forward outside of bankruptcy court as bellwether trials, while the Debtors want to estimate the claims in the bankruptcy process. Both are valid ways to value claims. This will be decided shortly after July 4 and is certainly precedent worth watching.
