In Crypto Bankruptcies, What Does ‘Repay in Full’ Mean? It Depends on Whom You Ask​​​

FTX has said that it will fully repay its swindled customers. Genesis Global, another bankrupt crypto platform, hasn’t made such a promise, but its customers could end up getting a lot more, WSJ Pro Bankruptcy reported. That’s because FTX is paying back customers in cash based on the value of their crypto assets in November 2022, when the company filed for bankruptcy 7 — and the market for digital assets had bottomed. Genesis, meanwhile, is making repayments in crypto, not cash, allowing customers to recover tokens that have surged in value amid a crypto market rally. The divergence stems from the novel legal question of how to value cryptocurrency-based claims in a bankruptcy proceeding. U.S. bankruptcy law stipulates that creditor claims should be valued in dollars as of the date of the bankruptcy petition. That effectively capped recoveries for account-holders at crypto companies, including FTX. The size of customers’ claims against FTX was fixed using beaten-down prices. FTX’s repayment plan will repay those claims in full, plus interest, in dollars. But it won’t give its trading customers credit for the drastic appreciation in crypto prices since November 2022. Some FTX users are upset at their treatment and say the “full-pay” chapter 11 plan really isn’t. Genesis calculated its customers’ claims differently, honoring the original amount of the crypto they had deposited and paying them back in the same form of crypto. Earlier this month, Genesis returned roughly $4 billion to its customers whose assets had been frozen since its bankruptcy filing in January 2023. Customers who lent bitcoins to Genesis will recover about 51% of their digital assets — but that equates to about 166% of their claims valued on the bankruptcy petition date. The recovery for most users in FTX’s crypto programs is expected to be around 120% of their petition-date values, and up to 143% for some. Read more.

U.S. Jobless Claims, Business Activity Keep Economy on Gradual Cooling Path​​​

The number of Americans filing new applications for unemployment benefits ticked up in the latest week, but appeared to be steadying near a level consistent with a gradual cooling of the labor market that should set the stage for the Federal Reserve to kick off interest rate cuts next month, Reuters reported. A slowdown in overall U.S. business activity this month as firms faced diminished ability to push through price increases added to the evidence that the economy is slowing and inflation is downshifting to a degree that should allow Fed officials to focus more attention on the job market. Initial claims for state unemployment benefits rose 4,000 to a seasonally adjusted 232,000 for the week ending Aug. 17, the Labor Department said today. The number of people receiving benefits after an initial week of aid, a proxy for hiring, rose 4,000 to a seasonally adjusted 1.863 million during the week ending Aug. 10, the claims report showed. The report on business activity also pointed to an orderly cooling in the economy. S&P Global said today that its flash U.S. Composite PMI Output Index, which tracks the manufacturing and services sectors, edged down to 54.1 this month, a four-month low but still a healthy level among the highest measured over the past two years. That followed a final reading of 54.3 in July. A reading above 50 indicates expansion in the private sector. A slight pick-up in the services sector was outpaced by an easing in the manufacturing industry. Read more.

Subchapter V Experiences to Share? ABI Wants to Hear from You!

ABI is continuing its study of Subchapter V, and it needs your help! We are particularly interested in learning more about the real-world impact of Subchapter V. So our question is, do you have a story about a distressed business or creditor who has used or benefited from the subchapter? If so, could that case still happen under the lower debt cap for Subchapter V debtors? Any and all responses are welcome. Submit your story at https://abi.org/subvstories.
 

Why the Canadian Freight Rail Halt Will Roil North American Supply Chains​​​

Canada's two main freight rail companies locked out around 10,000 of their Canadian unionized workers early on Thursday, starting an unprecedented simultaneous work stoppage that will grind almost all railway freight movement in the country to a halt, Reuters reported. Canadian National Railway Co. and Canadian Pacific Kansas City have said that their rail networks south of the border will continue to operate, but industry groups fear that a work stoppage would have far-reaching effects on the movement of goods and commodities across North America. CN and CPKC's coast-to-coast rail networks in Canada connect south of the border and serve as important supply chain links to trade corridors and ports across North America. The networks intersect with those of U.S. rail operators such as BNSF Railway, Union Pacific, Norfolk Southern and CSX, facilitating the movement of billions of dollars' worth of goods and commodities through ports and warehouses across the continent. Around a third of the traffic moved by the two Canadian rail companies crosses the border with the U.S. Many U.S. companies and producers, especially those in the Midwest, use Canadian ports for imports and exports, as Montréal can be faster for shipments to and from Europe, while Vancouver can be faster for ocean service to and from Asia. Union Pacific, the No. 2 U.S. railroad operator, has warned that a simultaneous stoppage would have devastating consequences for the U.S. and Canadian economies. Ratings agency Moody's said that the stoppage could cost over C$341 million ($251.14 million) per day. Read more.

Fannie Mae Economists Lower Their Expectations for 2024 Home Sales​​​

Mortgage rates have moved lower in recent months, but Fannie Mae economists said yesterday that this won’t be enough to increase the number of homes sold in the foreseeable future, HousingWire.com reported. Fannie Mae’s Economic and Strategic Research (ESR) Group downgraded its forecasts for 2024 and 2025 home sales based on a number of reliable metrics that have “barely budged in response to the more favorable rate environment.“ These include purchase mortgage application levels, home tour requests and online views of listings. The ESR Group now expects 4.78 million home sales in 2024 (down from 4.81 million in its prior forecast) and 5.19 million sales in 2025 (down from 5.26 million). The estimates are also derived from Fannie’s most recent consumer survey in which only 17% of respondents said that it’s a “good time to buy a home.“ Read more.

Housing Affordability Concerns Leading to Uptick in "Boommates"​​​

An uptick in so-called “boommates” — roommates of the baby boomer generation — is the latest manifestation of a housing affordability crisis that’s hitting Americans of all ages, especially those in expensive cities like New York, according to a Bloomberg News analysis. To make ends meet, an increasing number of those 65 and older are choosing shared housing arrangements, helping save money in an era when many have fallen behind on retirement savings and there’s increasing concern about a loneliness epidemic. Harvard University’s Joint Center for Housing Studies estimates that almost a million people over the age of 65 now live with unrelated housemates. Roommate finder sites have seen an influx of older users, with SpareRoom experiencing its fastest growth among that cohort. And one in four roommates in the U.S. is aged 45 or above, according to the site, a figure that’s more than doubled in the past decade. Versions of these shared living setups have existed for years, but they’re increasing in popularity as a surge in prices for housing, and pretty much everything else, coincides with the baby boomer generation entering retirement. There were 58 million Americans ages 65 and older in 2022, up from 43 million in 2012, according to Harvard’s JCHS. And a record 4.1 million Americans will turn 65 this year and every year through 2027, data from the Alliance for Lifetime Income shows. Read more.

Nomination Deadline is Sept. 6 for ABI's International Matter of the Year Award!

ABI’s International Committee is accepting nominations for its Third Annual ABI International Matter of the Year Award. For criteria, eligibility and other information on the award, please click here.

All nominations must be received by Sept. 6.
 

Get Your Copy of The Purdue Papers — Now Updated with the Supreme Court’s Ruling!​​​

The Purdue Pharma L.P. case, overturned at the end of June by the U.S. Supreme Court, generated a mountain of commentary in the form of amicus briefs, petitions and other related background material. Guided by editor David R. Kuney (who represented one group of amicus filers), ABI has gathered together all of this material in a fully searchable form — more than 3,500 pages worth! This digital book includes the final Supreme Court decision, a commentary by ABI Editor-at-Large Bill Rochelle, and a transcript of ABI’s July 2 webinar discussing the implications of the decision. It’s an invaluable resource for anyone working in the area of third-party releases, whether as a practitioner, an academic or just an interested party. Get your digital copy for only $25!

Pick Up Your Copy of Driving the Recovery Bus​​​

Make sure to pick up your copy of Driving the Recovery Bus: Augmenting Creditor Recoveries Through Claims Brought by a Litigation Trustee. Written by Gordon Z. Novod, this book is not only for litigation trustees, but also for creditors who serve on official committees of unsecured creditors, attorneys and other professionals who frequently represent official committees of unsecured creditors, and others with a general interest in the pursuit of causes of action by litigation trustees. Get your copy of Driving the Recovery Bus. 
 

Have an Idea for a Topic for an ABI Conference Session? Submit Your Proposal via ABI’s “Call for Abstracts” Page!​​​

ABI has launched an online portal for professionals to submit proposals for educational sessions at future ABI conferences. Submitters can describe their proposed topic, outline the session’s focus and learning goals, suggest speakers, and provide contact information via the portal’s detailed form. The portal can be accessed here.

All submissions will be reviewed by an internal Education Committee, which will contact the submitter to ask questions as needed and to discuss the status of the proposal. Submissions will be reviewed on a rolling basis.

Sign up Today to Receive Rochelle’s Daily Wire by E-mail!
Have you signed up for Rochelle’s Daily Wire in the ABI Newsroom? Receive Bill Rochelle’s exclusive perspectives and analyses of important case decisions via e-mail!

Tap into Rochelle’s Daily Wire via the ABI Newsroom and 'X' (Formerly known as Twitter)!