Below is our initial take on recent bankruptcy-related developments:
On Wednesday, WeWork, the bankrupt shared office space provider, asked for its landlords to make compromises on their leases through its first appearance in the U.S. bankruptcy court. The company is attempting to facilitate a restructuring plan that could eliminate $3 billion in debt and decrease its real estate footprint.
S&K Take: As expected, WeWork filed this week in bankruptcy’s new hotbed, the great state of New Jersey. There has been a good amount of press this week, including a discussion of Adam Neumann’s net worth, which notably remains above $1.7 billion despite this hot mess (and he just got hundreds of millions in financing for a new enterprise!!). The statement made by Debtors’ counsel at the first day hearing was a shot across the bow for WeWork’s many landlords, who assuredly already knew they were under the gun. Hilco, retained to work out the leases, will be busy for the next few months.
FTX founder Sam Bankman-Fried was found guilty of all criminal charges brought against him relating to the collapse of his crypto company. Bankman-Fried could face over 100 years in prison.
S&K Take: Interesting piece on the ramifications of SBF’s conviction. Sentencing guidelines suggest SBF could catch a sentence over 100 years, although it seems experts think it will more likely fall in the 10-25 year range. Sentencing is scheduled for March 28, 2024, around the time the government could be commencing further action against SBF. SBF will be undoubtedly be spending a lot more time with alternative currencies, although this time it will be cigarettes instead of crypto.
Bankrupt cryptocurrency exchange FTX stated inclination to sell its Trust assets held at Grayscale and Bitwise valued at $744 million. FTX clarified that the sale of its Trust assets was necessary to reduce against possible downward price swings in the Trust assets, boost the value of the Debtors’ estates and permit for impending dollarized allocations to creditors.
S&K Take: Back at SBF’s old stomping grounds, the liquidation seems to be going pretty well. FTX claims, which started in the single digits (although there was massive uncertainty about the shape of the case at that point) are now trading in the 40s, 50s and 60s based on the word on the street. Query whether continued litigation can keep those prices moving on an upward trajectory.
On Monday, the bankrupt former parent of Silicon Valley Bank, SVB Financial Group, stated that the U.S. government had previously denied its request for a return of nearly $1.93 billion that was seized by regulators after the bank’s downfall. SVB Financial Group has been stuck in a contention with the U.S. Federal Deposit Insurance Company (FDIC) since March and it denied the parent company’s latest attempt to recover the funds on October 20.
S&K Take: This has been an interesting back and forth, with the latest twist that SVB’s request for the return of almost $2 billion seized by the FDIC was denied. I won’t betray my ignorance by trying to summarize what is undoubtedly a complex issue being argued by capable counsel. The back and forth between SVB and the FDIC is linked in the article, so if you are interested its worth a glance.
