Below is our initial take on recent bankruptcy-related developments:
The International Longshore and Warehouse Union (ILWU) has filed for a Chapter 11 bankruptcy protection to fend off long standing litigation with the Oregon affiliate of the International Container Terminal Services Inc (ICTSI). According to the San Francisco court that made the filing on September 30, the union that represents U.S. dockworkers has listed its assets and liabilities in the range of $1 million to $10 million.
S&K Take: We start off the week with something you don’t see every day, a Union in bankruptcy. The filing was precipitated by litigation filed by the ICTSI, which alleges that the ILWU engaged in some less than savory activity, purportedly slowing down activity at the port of Portland for a multi-year stretch. The litigation has been extant for almost 10 years, and trail is looming. If ITCSI is as scorched-earth as the ILWU suggests, we could be in for some fireworks in this case. It may be a likelihood given the bad blood that seems to exist between the parties.
Company founder and former CEO Steve Burns of electric pickup truck maker Lordstown Motors has offered to pay $10 million to buy the company’s assets out of bankruptcy. This comes after an international investigation in June 2021 that found accuracy to a short seller’s allegations that Burns was guilty of boosting order estimates for the Endurance commercial pickup truck.
S&K Take: The Lordstown case has had no end of twists and turns. Now the former CEO, who has been accused of inflating order estimates for the company’s trucks to pump the stock (and who sold more than $60 million in shares after its SPAC transaction closed in 2020), has made the only bid for Lordstown’s assets at $10 million. People smarter than I am suggest that the assets have little value, but of course that remains to be seen. Is he a true believer? If so, why did he leave the company in 2021? If not, why buy the assets? Will continue to watch this case with great interest.
On October 2, bankrupt crypto lender Celsius Network confirmed in a hearing that it will begin to pay back its creditors using $2.03 billion in Bitcoin by the end of the year.
S&K Take: The curtain went up on the Celsius confirmation hearing last week, with the Debtors staring that they intend to start distributing crypto to customers by year end of the plan is approved. It has been a long time coming for customers, who have waited through an extended bidding and plan process, but now have a Newco supported by an investor group that will purportedly fund $50 million in Newco through an equity contribution and $450 million in crypto. Or there will be an orderly liquidation. If the plan is approved, we will see which is the ultimate outcome.
On Tuesday, a judge rejected the idea of putting the Boy Scouts of America’s $2.46 billion abuse settlement on hold. Halting the organization’s bankruptcy settlement would put 99.8 percent of its abuse claims “back into limbo” rather than moving victims toward compensation.
S&K Take: Delaware District Court Judge Richard Andrews has declined a request to stay the implementation of the Boy Scouts plan while the third-party release issue is before the US Supreme Court in the Purdue case. This isn’t a big surprise, but it is welcome news for claimants. Regardless, we can expect that this will be appealed to the Third Circuit. If Purdue comes down against releases, maybe we then get to see a Supreme Court decision on equitable mootness stemming from Boy Scouts.
