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Sam Bankman-Fried, the founder of collapsed cryptocurrency exchange FTX, has issued his first detailed legal defense since prosecutors accused him of fraud, seeking to dismiss several of the charges and claiming that the high-powered law firm representing FTX in its bankruptcy has been doing the government’s bidding, the New York Times reported. In court filings yesterday, lawyers for Bankman-Fried said FTX and its lawyers at Sullivan & Cromwell had become de facto agents of federal prosecutors building the criminal case against him and might be withholding crucial evidence. “FTX’s legal advisors went to the government to accuse Mr. Bankman-Fried behind his back without knowing the full facts, and ultimately forced him to step down as C.E.O.,” the lawyers wrote. For months, Sullivan & Cromwell has funneled documents and other evidence to the prosecution, the filings say. Mr. Bankman-Fried’s lawyers claimed that prosecutors had been seeking only the most incriminating documents, even though FTX might also be sitting on material that could help the defense. In effect, they argued, prosecutors have been “outsourcing” the legal requirement to provide potentially helpful material to the defense team, shifting that responsibility to a “private party” with no obligation to Mr. Bankman-Fried.

Discount home-goods retailer Christmas Tree Shops filed for chapter 11 on Friday with a plan to emerge from bankruptcy in months with its store base mostly intact, WSJ Pro Bankruptcy reported. The 82-store chain filed bankruptcy aiming to close 10 underperforming locations in bankruptcy and to exit chapter 11 by August, Christmas Tree Shops said. The Middleboro, Mass.-based company has no plans to seek a buyer. Owners Marc and Pam Salkovitz, who are also creditors of the company, plan to retain an ownership stake in the restructured business, Salkovitz said on Friday. “This is strictly a financial restructuring. Our operations are sound,” said Salkovitz, the company’s chairman. Christmas Tree Shops filed for bankruptcy with a $45 million loan, including roughly $20 million in fresh capital, from its lenders to finance it through chapter 11, Salkovitz said. The loan is subject to bankruptcy court approval.

Vice Media is nearing a deal for senior lenders, including Fortress Investment Group and Soros Fund Management, to acquire the troubled media company out of bankruptcy at a valuation of around $400 million, the Wall Street Journal reported. Nearly every Vice stockholder — including backers such as private-equity firm TPG Group, Sixth Street Partners and media mogul James Murdoch — would be wiped out under the proposed reorganization, people familiar with the matter said. Outstanding debts held by TPG and Sixth Street would also be impaired as part of the plan. The planned sale of the company to its lenders would value Vice at around $400 million including debt, a steep drop from its peak valuation of $5.7 billion in 2017. The final purchase price could also change as part of negotiations between the company and the lender group. (Subscription required.)

Some bankrupt companies are turning to a strategy to help them restructure their debt without losing the attractive terms on legacy loans as interest rates rise, often to lenders’ chagrin, WSJ Pro Bankruptcy reported. Outpost Pines, a property owner on New York’s Fire Island that sought protection from creditors in February, is asking a bankruptcy judge to approve a plan for it to keep 3% interest on mortgage debt it took out in 2015 so it can avoid paying a 16% default rate on the loan. Others, such as the owners of a 50-story Holiday Inn in Manhattan’s Financial District and of a 41-unit apartment building in New Jersey, in recent months also have sought to keep their legacy rates in bankruptcy. Businesses regularly file for chapter 11 protection to lessen their debt load, usually by retiring old loans and making new ones. As interest rates have climbed, more businesses in financial distress are looking for ways to retain legacy borrowing rates put in place well before the Federal Reserve raised its benchmark rate to between 5% and 5.25%, a 16-year high. The Fed on Wednesday announced a quarter-percentage-point rate increase to reach that level, marking the central bank’s 10th consecutive rate rise aimed at battling inflation.

The judge presiding over crypto exchange FTX’s bankruptcy case has given the green light to a motion allowing the sale of LedgerX, CoinTelegraph.com reported. In a May 4 hearing in the U.S. Bankruptcy Court for the District of Delaware, Judge John Dorsey approved a motion the FTX debtors filed in April to sell LedgerX to M7 Holdings, an affiliate of Miami International Holdings. FTX said at the time of the purchase agreement that the total proceeds of the transaction would total roughly $50 million. According to lawyers speaking at the hearing, there were no objections to the sale of LedgerX. A representative who spoke on behalf of OKC USA Holding — one of the other bidders for LedgerX — largely did not object to the proceedings but said the firm “reserve[s] all of their rights to seek appropriate relief” relating to a declaration filed by Bruce Mendelsohn, a partner for the FTX debtors’ investment banker. The lawyer claimed Mendelsohn made “not true” statements in regard to OKC’s regulatory obligations to the Commodity Futures Trading Commission (CFTC) and the U.S. government.

Before SVB Financial Group bondholders can collect the billions they are owed, the bankrupt company may have to file a claim with the Federal Deposit Insurance Corp. to recover $2 billion worth of deposits trapped by the receivership of Silicon Valley Bank, Bloomberg News reported. That’s because the cash can only be returned to the bank holding company through the receivership process set up after federal regulators seized Silicon Valley Bank, the FDIC argued in court papers on Wednesday. SVB Financial has been sparring with the agency over the $2 billion since filing for bankruptcy in March. The dispute has already bogged down the Chapter 11 case and threatens to pit the bankruptcy process against the receivership process the FDIC uses to repay creditors. “Although the FDIC approved additional funding under the systemic risk exception to protect SVB’s depositors, nothing that has transpired since March 10 altered the debtor-creditor relationship that exists” between the former parent company and the FDIC, lawyers representing the agency wrote in court papers filed on Wednesday.

Experts testifying at a Thursday hearing categorically blamed executive mismanagement for the recent spate of bank failures feared to be hurtling the economy into a recession, The Hill reported. At a Senate Banking Committee hearing, banking and regulatory experts from the University of Richmond School of Law, Catholic University and the U.S. Chamber of Commerce lobbying group all said bad management was the primary causes of the failures. “Those three banks had very unique business models,” Chamber of Commerce vice president Tom Quaadman testified. “Silicon Valley Bank concentrated on capital intensive tech startups as well as biomedical startups. First Republic Bank concentrated on wealth management, whereas Signature Bank had a large exposure to digital assets.” Regulatory lapses on the part of the Federal Reserve were also cited by the experts and by lawmakers of both parties. While the hearing was focused on “holding executives accountable after recent bank failures,” no bank executives were present at the Senate hearing, and no legal actions have been taken against any of them.

Christmas Tree Shops, the discount home-goods chain spun out by Bed Bath & Beyond in 2020, is preparing to file for bankruptcy as early as this weekend, WSJ Pro Bankruptcy reported. The Middleboro, Mass.-based chain of roughly 80 bricks-and-mortar stores recently hired Boston-based law firm Murphy & King to prepare a potential chapter 11 filing. The chain was acquired from Bed Bath & Beyond by Handil Holdings, owned by entrepreneurs Marc Salkovitz and Pam Salkovitz. They embarked on a plan to rebrand the stores as CTS to increase awareness of the breadth of its offerings beyond Christmas items. Mr. Salkovitz told the Wall Street Journal in 2021 that the name of the chain led many customers to believe that the stores only sell Christmas-related items. Christmas Tree Shops could follow its former parent into bankruptcy. Bed Bath & Beyond filed for chapter 11 in April after years of losses and failed turnaround plans left the home-goods chain short of cash.

Lordstown Motors on Thursday reported a steep fall in its cash reserves and warned it might have to stop making its Endurance electric pickup truck in the near future unless it finds a partner, Reuters reported. The cash-strapped EV maker had earlier this week said it might be forced to file for bankruptcy, citing uncertainty over a $170 million investment deal with its major shareholder Foxconn. Lordstown, named after the town in Ohio where it is based, said on Thursday it was in talks with the Apple Inc. supplier but was yet to reach a deal. In May 2022, Lordstown Motors completed a deal to sell its Ohio factory for $230 million to Foxconn, excluding assets such as the hub motor assembly and battery pack lines. Foxconn will make Fisker Inc's PEAR electric compact car at the Ohio factory starting next year, the EV startup has said. Lordstown Motors had cash and cash equivalents of $108.1 million as of March 31, down from $203.6 million a year earlier.