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FTX is moving ahead with efforts to revive its flagship international cryptocurrency exchange, even while its reputation continues to take a hit as new managers shed light on how they say nearly $9 billion in customer funds were stolen before the company’s collapse last year, WSJ Pro Bankruptcy reported. The company “has begun the process of soliciting interested parties to the reboot of the FTX.com exchange,” said Chief Executive John J. Ray III, who took over in November when it filed for bankruptcy. The failed crypto company has been holding early talks with investors about backing a potential restart of the FTX.com exchange through structures including a joint venture, people familiar with the discussions said. FTX would likely rebrand as part of any restart, these people said. The talks include possible compensation for certain existing customers, possibly by offering them stakes in any reorganized entity, the people said. Blockchain technology company Figure has indicated its interest in helping back a restart of FTX, people familiar with the matter said. Figure was part of an investment group that bid for the rights to restart Celsius Network, another bankrupt crypto business, but lost out to a consortium backed by Fortress Investment Group.
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In related news, bankrupt cryptocurrency exchange FTX sued one of its former top lawyers, accusing him of aiding fraud by company founder Sam Bankman-Fried and silencing whistleblowers who reported wrongdoing at the company, Reuters reported. The complaint, filed on Tuesday in U.S. Bankruptcy Court in Delaware, describes Daniel Friedberg, a former chief compliance officer at FTX and general counsel of its related crypto hedge fund Alameda Research, as a "fixer" for Bankman-Fried and other FTX executives who enabled the "wholesale raiding" of customer funds. Friedberg “whitewashed” complaints from employees raising concerns about the activities of FTX and Alameda by settling claims for “inflated” amounts and in some cases hiring law firms that represented whistleblowers to perform legal work for FTX, the company said. The settlement amounts are redacted in the complaint.
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A beleaguered trucking business that received a $700 million pandemic-era loan from the federal government may be forced to file for bankruptcy protection this summer amid a dispute with its union, a development that could leave American taxpayers stuck with a failed company, the New York Times reported. The financial woes at the business, Yellow, which previously went by the name YRC Worldwide, have been building for years. The company lost more than $100 million in 2019 and has more than $1.5 billion in outstanding debt, including the government loan. In 2022, YRC, which ships meal kits, protective equipment and other supplies to military bases, agreed to pay $6.85 million to settle a federal lawsuit that accused it of defrauding the Defense Department. In 2020, the Trump administration, which had ties to the company and its executives, agreed to give the firm a pandemic relief loan in exchange for the federal government assuming a 30 percent equity stake in the company. Three years later, Yellow is on the verge of going bankrupt. Since receiving the loan, the company has changed its name, restructured its business and seen its stock price plummet. As of the end of March, Yellow’s outstanding debt was $1.5 billion, including about $730 million that is owed to the federal government. Yellow has paid approximately $66 million in interest on the loan, but it has repaid just $230 of the principal owed on the loan, which comes due next year. On Tuesday, Yellow sued the International Brotherhood of Teamsters for blocking the company’s restructuring plan and accused the union of causing more than $137 million in damages. The company said that it was taking “immediate steps to try to save itself” and that the union was trying to “cause Yellow’s economic ruin.”

David’s Bridal LLC has received a tentative going-concern bid that would keep more than 190 stores open, spurring optimism that the wedding dress retailer might be able to survive bankruptcy, Bloomberg News reported. The deal would also keep more than 7,000 jobs by staving off mass store closures, lawyers for the company said in a bankruptcy court hearing Tuesday. The bid deadline has been extended to July 3 and a new sale hearing is scheduled for July 14. “We think the opportunity to save 7,000 jobs and over 190 stores is fantastic for the vendors and the landlords,” Brad Sandler, an attorney representing the company’s official creditor committee, said during the hearing. Price and precise terms of the offer were not disclosed. David’s entered bankruptcy with nearly 300 stores.

A federal judge on Tuesday rejected Sam Bankman-Fried's bid to throw out most of the U.S. government's criminal case accusing the FTX cryptocurrency exchange founder of orchestrating a multibillion-dollar fraud, Reuters reported. The decision by U.S. District Judge Lewis Kaplan in Manhattan paves the way for an Oct. 2 trial of Bankman-Fried, a 31-year-old former billionaire. Prosecutors accused Bankman-Fried of stealing billions of dollars in FTX customer funds to plug losses at his Alameda Research hedge fund. They also accused Bankman-Fried of misleading investors and lenders, and contributing illegally to U.S. political campaigns in the names of colleagues. Bankman-Fried has pleaded not guilty and denied stealing funds, while acknowledging that FTX had inadequate risk management.

Liquidators at bankrupt cryptocurrency hedge fund Three Arrows Capital are seeking to recover $1.3 billion from the co-founders, a person familiar with the matter told Reuters on Tuesday, an amount that reflects losses they allegedly racked up before the firm collapsed last year, Reuters reported. The liquidators discussed the allegations against Three Arrows co-founders Su Zhu and Kyle Davies at a Tuesday meeting with the hedge fund's creditors, the person said. Zhu and Davies are accused of causing Three Arrows to take on significant leverage between May and June 2022 after the hedge fund suffered big losses on Luna tokens and other investments, the person said. The firm was already insolvent, liquidators contend, and they are now taking action against Zhu and Davies in a British Virgin Islands court to recover those losses for the creditors, the person added.

A U.S. bankruptcy judge yesterday approved Overstock.com's $21.5 million purchase of Bed Bath & Beyond's brand name, intellectual property and ecommerce platform, Reuters reported. Bankruptcy Judge Vincent Papalia approved the sale at a court hearing in Newark, New Jersey, saying that he was "gratified" to see a bidder emerge that would preserve Bed Bath & Beyond's brand. Overstock emerged as the winning bidder for the company's intellectual property in a deal worth $21.5 million, court filings showed on Thursday. Bed Bath & Beyond stores and inventory are not part of the deal. Once a storied retailer, Bed Bath & Beyond filed for chapter 11 bankruptcy protection in April after struggling for years with dwindling sales and a failed merchandising strategy. Bed Bath & Beyond is hosting a separate auction starting tomorrow for its Buy Buy Baby chain, which sells products for infants and toddlers. The Buy Buy Baby assets have attracted interest from investment firms Go Global Retail and Sixth Street Partners, according to media reports.

Peer Street, a real-estate debt provider aiming to make financing more accessible for wealthy investors and institutions, has filed for bankruptcy due to reduced mortgage demand and scarcer venture-capital funding, WSJ Pro Bankruptcy reported. The El Segundo, Calif.-based online platform, which counts venture-capital firms including Andreessen Horowitz and World Innovation Lab as backers, plans to sell itself as part of a chapter 11 filed on Monday. The company entered bankruptcy with both assets and liabilities of up to $100 million. It plans to keep operating while looking for buyers for its loans and other holdings, according to the filing. Rising interest rates have caused demand for mortgages to drop significantly, reducing Peer Street’s revenue, Chief Restructuring Officer David Dunn said in a sworn declaration filed in the U.S. Bankruptcy Court in Wilmington, Del. Peer Street was founded in 2013 with an aim of giving individual investors access to an asset class that typically has been difficult to tap into, while also providing capital to real-estate lenders and their borrowers. The company gets its loans from private lenders and brokers, and also originates, sells and services loans. Peer Street has originated $5.4 million in mortgages so far this year until its bankruptcy filing, down from $385 million last year and $696 million the year before.