Below is our initial take on recent bankruptcy-related developments:
On Tuesday, collapsed cryptocurrency exchange FTX unveiled its reorganization plan and stated it has recovered adequate funds to pay the majority of its creditors back in full. The reorganization plan still needs to be approved by the U.S. court and the Debtors need to formally resolve disputes with governmental stakeholders.
S&K Take: The end of the FTX case draws nigh. Earlier this week, FTX filed a revised draft plan and disclosure statement which has sparked some significant buzz in the restructuring industry. If you missed it, the DS estimates that customer entitlement claims will receive 127% to 142% recovery, while GUCs are slated to get 125%. The par plus recovery is generated through 9% interest from the petition date through the distribution date, as well as governmental restitution, although that part is not fully agreed, and is intended to compensate customers for the opportunity loss with respect to their cryptoassets during the pendency of the cases. The Debtors can afford to pay these amounts largely because the value of crypto has skyrocketed, with BTC almost quadrupling in value from approximately $16k as of the petition to over $60k today (although it looks like BTC took a hit this morning for a reason of which I am not currently aware). Even better news for customers is that the Debtor is aiming for confirmation at the end of September with initial distribution of 118% within 60 days. Customers may have cash in their accounts by December. It is a Festivus miracle! But wait, there is more! Preference claims are being waived (unless you are Excluded)! There are still some unhappy folks out there who believe that they are entitled to the return of their crypto in kind. They will likely contest confirmation, although that seems a bit of a fool’s errand. On the happy side of the equation are the claims traders that amassed billion-dollar positions over the last 15 months (we have come a long way from .08-.10 for claims--most recently have been hearing bids in the 105 context). Tons of interesting angles here, and we still have the examiner report coming. Obviously, the plan is far from a done deal, clearly, but this is a massive step forward.
On Monday, Steward Health Care filed for Chapter 11 bankruptcy protection with hopes to keep all of its hospitals open over the long term. In a court hearing on Tuesday in Houston, Steward’s attorneys stated it has listed all of its 31 U.S. hospitals for sale with hopes to finalize deals by the end of the summer to address its liabilities of $9 billion.
S&K Take: On Monday, Steward Health Care filed for Chapter 11 bankruptcy protection with hopes to keep all of its hospitals open over the long term. In a court hearing on Tuesday in Houston, Steward’s attorneys stated it has listed all of its 31 U.S. hospitals for sale with hopes to finalize deals by the end of the summer to address its liabilities of $9 billion.
On Wednesday, 100-year-old music instrument retailer Sam Ash filed for Chapter 11 bankruptcy stating it plans to close all of its 42 stores in the U.S. The family-owned company has dealt with declining sales ever since the COVID-19 pandemic.
S&K Take: Interesting filing on Wednesday, everyone’s favorite music store has filed what looks like a liquidating case. The Debtors have a DIP from Tiger Finance and a plan to liquidate inventory with Gordon Brothers at its 42 locations. The Debtors are holding out hope for a going concern bid, but odds would appear to be long on that possibility. We will keep an eye on this one, but most likely we won’t be seeing Sam Ash again unless a third party is using their IP.
