Bank regulators raced over the weekend to avoid a broader crisis from Friday’s stunningly hasty collapse of Silicon Valley Bank by trying to sell the lender’s assets to shield the banking system and economy from wider fallout, the Wall Street Journal reported. U.S. regulators on Sunday said that they are auctioning the failed bank. Treasury officials confirmed the auction to congressional lawmakers and staff on a call Sunday afternoon. It wasn’t immediately clear when the results would be announced. In addition, regulators are considering more extraordinary measures such as deeming the failure of SVB to be a systemic risk to the financial system. That could give regulators more flexibility to backstop uninsured deposits. A U.S. plan that soothes nerves about access to uninsured deposits — most of the bank’s deposits are sizable enough that they don’t carry Federal Deposit Insurance Corp. protection — could tamp down the crisis and limit any impact on the economy as the Federal Reserve focuses on combating inflation by raising interest rates. But failing to swiftly clarify how SVB’s customers can access funds, make payroll and conduct business risks broader economic consequences and threatens to complicate the Fed’s monetary policy decisions.
The closure of Signature Bank, a lender that counted a number of crypto companies as customers, marks another major setback for digital assets as the industry becomes ever more cut off from the banking system, Bloomberg News reported. The Treasury Department said Signature Bank was closed by New York state regulators Sunday and that depositors will have access to their money on Monday. The shutdown comes soon after the twin collapses of Silvergate Capital Corp. and Silicon Valley Bank. All the banks were, at least at one point, counted among the U.S.’s most crypto-friendly financial institutions. Signature had begun a pull back from digital assets in the wake of the blowup of the FTX exchange but still had $16.5 billion in crypto-related client deposits as of March 8. Signature and Silvergate also enabled fast payments between customers like hedge funds and exchanges, supporting digital-asset liquidity. Coinbase Global Inc., the U.S.’s biggest crypto exchange, said on Friday night that it had a $240 million balance at the bank. Paxos Global, which had previously partnered with Binance on the BUSD stablecoin, said it had $250 million at Signature. In the tweet, Paxos said it “holds private deposit insurance well in excess of our cash balance and FDIC per-account limits.”
The U.S. Department Justice has appealed a court order approving Voyager Digital's bankruptcy plan, creating a new hurdle for the crypto lender's plan to sell its assets and transfer its customers to Binance.US in a deal valued at $1.3 billion, Reuters reported. The U.S. Attorney's Office for the Southern District of New York and the Office of the U.S. Trustee, the Department of Justice's bankruptcy watchdog, filed a notice of appeal late Thursday in U.S. bankruptcy court in Manhattan. It did not detail why they were appealing. Bankruptcy Judge Michael Wiles, who is overseeing Voyager's chapter 11 bankruptcy process, had approved Voyager's restructuring plan, which is built around the acquisition by crypto exchange Binance.US, at a hearing on Tuesday after overruling objections from the U.S. Securities and Exchange Commission and DOJ. Lawyers for the U.S. Trustee and U.S. Attorney's office spoke up at hearings to consider Voyager's bankruptcy plan to oppose provisions Voyager included to protect employees from potential legal claims resulting from actions taken during the bankruptcy. They argued that Wiles' order approving the plan was written too broadly, potentially preventing the government from bringing regulatory enforcement actions or criminal charges if misconduct was discovered later. Judge Wiles disagreed, saying that Voyager and its employees should not be penalized for carrying out a court-approved sale to Binance.US. If the DOJ or any government agency had evidence of misconduct specifically related to the bankruptcy, they should have presented it in court, Judge Wiles said.
A major cryptocurrency operated by Circle Internet Financial Ltd. meant to mimic the value of the U.S. dollar dropped sharply after the company said it had $3.3 billion tied up in the collapsed Silicon Valley Bank, the Wall Street Journal reported. USD Coin fell below 87 cents on Saturday morning, according to data from CoinDesk. The virtual currency, known as a stablecoin, is designed to trade exactly at $1. It is backed by real U.S. dollars and short-term government debt, and sits at the heart of cryptocurrency trading. Breaking USD Coin’s peg with the dollar has the potential to send shock waves through the cryptocurrency world still reeling from the collapse of FTX. For crypto traders, the decline in the value of USD Coin is reminiscent of the worst moments of the 2008 financial crisis when the Reserve Primary Fund, a money-market fund that most investors treated as the equivalent of cash, “broke the buck” in the wake of Lehman Brothers’ failure and saw its net asset value fall below $1. Stablecoins such as USD Coin have become an increasingly critical part of the digital-asset ecosystem, accounting for over $130 billion in market value, up from just $11 billion in June 2020. Crypto traders rely on stablecoins to quickly get in or out of their positions in more volatile cryptocurrencies, while companies often store their capital and profits in stablecoins.
An anticipated chapter 11 petition for Madera (Calif.) Community Hospital was filed in federal bankruptcy court on Friday, the The Business Journal reported. Saint Agnes Medical Center is the largest secured creditor, owed $15.4 million. New England Sheet Metal and one of its subcontractors together hold mechanic’s liens of about $1.1 million. About $2 million is owed in unpaid, accumulated time off for employees. All unsecured creditors are owed a total of about $9.1 million. Madera Community Hospital also filed a list of its 20 largest, unsecured creditors. The largest unsecured creditor is Citizens Business Bank, owed $1.1 million, followed by the State of California Emergency Medical Services Authority owed $776,412 and Arya Medical Group in Fresno owed $300,723. Assets include $5 million in cash, the hospital campus with an estimated value of $16 million to $60 million and incoming provider fees of $24 million. Along with the bankruptcy petition, Madera Community Bank also filed emergency motions to pay certain pre-petition wages, salaries, benefits and other compensation. According to the filing, the hospital has laid off more than 700 employees since Dec. 26, and currently has 31 full-time employees and four per diem employees managing the shuttered facility in administration and maintenance positions.
The Diocese under the Roman Catholic Bishop of Santa Rosa will be filing for bankruptcy Monday due to the large number of lawsuits filed against it from people who allege they were sexually abused, Bishop Robert Vasa said Friday, Patch.com reported. The lawsuits came in the wake of a three-year window declared by Gov. Gavin Newsom beginning in 2020 and ending on Dec. 31, 2022, that overruled the normal statute of limitations and opened the floodgates for litigation. According to the Catholic News Agency, Newsom's move allowed for suits to be brought that have gone back up to 75 years. For the Santa Rosa Diocese, the number of suits could be as many as 200, with 115 dating back more than 30 years. "These cases are too numerous to settle individually and so they have accumulated until the closing of the three-year window," Vasa said on Friday in his statement. "Now that the window is closed, we have received notice of at least 160 claims and we have information that perhaps more than 200 claims have been filed in total against the Diocese."
A U.S. regional sports broadcaster has failed to make a scheduled payment to Major League Baseball's Arizona Diamondbacks, a sign that bankruptcy is near for the company that provides local television broadcasts for nearly half of MLB, National Basketball Association and National Hockey League teams, Reuters reported. Diamond Sports, a Sinclair Broadcast Group subsidiary that operates the "Bally Sports" branded channels, said in a Friday statement that it missed a payment owed to the Diamondbacks but continues to pay broadcasting rights fees owed to other teams. The broadcaster had said last month that it missed a $140 million payment owed to its lenders, which triggered a 30-day grace period on its debt agreements. The company said at the time that it would use the 30 days to pursue restructuring talks with creditors and other key stakeholders. Sources familiar with the negotiations who asked remain anonymous to speak frankly expect those talks to lead to a chapter 11 bankruptcy filing this week.
Loyalty Ventures Inc. filed for bankruptcy Friday, blaming its financial problems largely on its 2021 spinoff from its parent company, a move that it said left the new business with substantial debt and limited cash flow, WSJ Pro Bankruptcy reported. The Dallas-based loyalty-programs operator filed for chapter 11 in the U.S. Bankruptcy Court in Houston and said it plans to sell its customer-rewards programs including its Air Miles Reward Program, a loyalty program popular in Canada, and its Europe-based BrandLoyalty program for grocers and other retailers. Loyalty, which initiated a companion bankruptcy in Canada, listed nearly $1.6 billion in assets and nearly $2 billion in debt. The chapter 11 filing comes little more than a year after Loyalty was spun off from Bread Financial Holdings Inc., formerly known as Alliance Data Systems Corp. Revenue and earnings at Loyalty were in decline even before the spinoff and the company was saddled with substantial liabilities, it said in court filings. Loyalty owes more than $656 million on a credit facility it was required to take on as part of the 2021 spinoff, Chief Executive Charles Horn said in a sworn statement. Proceeds from the credit facility plus $100 million taken from Loyalty’s operating businesses were used to pay down Alliance Data debt, Mr. Horn said. Read more.