%1

Prosecutors and attorneys for FTX founder Sam Bankman-Fried are requesting the disgraced cryptocurrency entrepreneur be allowed a flip-phone or another device that’s not a smartphone while on bail, the Associated Press reported. The proposal, submitted in a letter Friday, comes as the judge in the case is deciding how to toughen Bankman-Fried’s bail requirements amid concerns the former billionaire might be communicating on electronic devices in ways that can’t be traced. Prosecutors alleged last month Bankman-Fried used a virtual private network that blocks third parties from seeing online activity, known as VPN, to access the internet twice. They also said he sent an encrypted message over the Signal texting app in January to the general counsel of FTX US, a move they argued might indicate witness tampering. Bankman-Fried has pleaded not guilty to charges that he cheated investors and looted customer deposits at FTX, his cryptocurrency platform.

Shareholders of bankrupt bitcoin miner Core Scientific Inc. will have an official voice in its chapter 11 case and a $4.75 million budget from the company to advocate for as large a recovery as possible for its equity, WSJ Pro Bankruptcy reported. Bankruptcy Judge David Jones in Houston said on Friday that he was approving the appointment of an official committee of equity holders after warning that he would closely examine — and potentially claw back — any legal fees incurred by shareholders for unnecessary litigation. Creditors including BlackRock Inc. and Apollo Global Management Inc. had opposed the formation of an official equity committee, saying its fees would eat into recoveries on the company’s secured debt, which isn’t guaranteed to be paid in full. But Core Scientific agreed to fund the equity committee after the rising price of bitcoin fueled hopes that its shares would have value despite its bankruptcy filing. Judge Jones said last week that he would respect the company’s business judgment. He also warned that he would use any tools available if the equity committee pursued litigation that didn’t add value to the chapter 11 estate.

The owner of Pier 1 Imports and RadioShack is sounding out investors to finance itself through a possible bankruptcy, Bloomberg News reported. Retail Ecommerce Ventures LLC is considering pledging the intellectual property of some of the brands it owns to raise money. When the pandemic sparked a wave of retail bankruptcies, Retail Ecommerce Ventures picked up a slew of iconic brands on the cheap, with the aim to revive them as online-first businesses. Its portfolio also includes Modell’s Sporting Goods and Stein Mart. Now it’s looking to line up a potential buyer for its portfolio companies, the people said. Investment bank Piper Sandler Cos has been providing advice to Retail Ecommerce Ventures. Founders Alex Mehr and Tai Lopez have been active in promoting their venture to retail investors on social media and TV, telling them they can profit from a strategy that buys distressed brands for pennies on the dollar and then turns them around. The duo sought to rebrand century-old RadioShack by launching a cryptocurrency exchange platform last year as the brand garnered social-media attention from tweets filled with expletives and profanity. More recently, Retail Ecommerce Ventures led a $35 million financing deal for Tuesday Morning Corp. The discount retailer filed for bankruptcy for the second time last month after battling supply chain bottleneck and inflationary pressures.

Authentic Brands Group Inc. is nearing a deal to pay about $1.3 billion for the parent of Quiksilver and Billabong surfwear brands, Bloomberg News reported. A deal for Boardriders Inc. could be announced as soon as this week. No final decision has been made and discussions could fall through. Boardriders, which also owns the Roxy brand, is controlled by Oaktree Capital Management. Oaktree, which specializes in distressed or troubled companies, acquired Boardriders — then known as Quiksilver — when it emerged from bankruptcy in 2016. Two years later it bought competitor Billabong. Authentic Brands, led by Chief Executive Officer Jamie Salter, is one of the most acquisitive companies in the consumer and retail sector. The deal would add to the company’s stable of dozens of well-known brands, including Reebok, Brooks Brothers and Eddie Bauer.

FTX says it has identified a deficit of $8.9 billion in customer funds that it can’t account for, the first time the bankrupt cryptocurrency exchange has pinned down how much money has gone missing, WSJ Pro Bankruptcy reported. In a public presentation released yesterday, FTX said that it had identified around $2.7 billion of customer assets, compared with $11.6 billion of balances outstanding on customer accounts. The estimated value of FTX’s assets and liabilities are based on crypto prices on the day of the company’s bankruptcy filing in early November. New managers at FTX, led by restructuring veteran John J. Ray III, have been working to locate and protect billions of dollars in missing customer funds since the company filed for bankruptcy. FTX sought chapter 11 protection after allegations emerged that Alameda Research, a hedge fund started by FTX co-founder Sam Bankman-Fried, was taking customers’ funds from FTX accounts without authorization. Ray said on yesterday that it isn’t yet possible to predict how much customers will be able to recover. “[The exchange’s] books and records are incomplete and, in many cases, totally absent,” Ray said. “For these reasons, it is important to emphasize that this information is still preliminary and subject to change.” It isn’t clear whether customers will be able to recover the entirety of the $2.7 billion in assets that FTX has found. About $1.5 billion of that total included illiquid crypto assets like FTX’s token, FTT, whose value has fallen since the firm’s collapse. Around $880 million in found customer assets are considered “liquid currencies” like dollars, stablecoins, bitcoin or ether, FTX said. Around $400 million are in other receivables, the presentation shows. A great deal of the total $8.9 billion shortfall at FTX can be attributed to Alameda Research, which had borrowed $9.3 billion from customers’ accounts before the exchange went bankrupt, the presentation shows.

Stratford University, the for-profit college whose abrupt closure last year left hundreds of students without a clear path to a degree, officially filed for chapter 7 bankruptcy earlier this month, WTOP.com reported. In Feb. 2 filings with the Eastern District of Virginia’s bankruptcy court in Alexandria, the defunct college claims to hold $696,241 in assets but over $8.5 million in debt. According to the filings, $2.2 million of that debt is owed to the U.S. Department of Education for loans that the department had to discharge because of the school’s closure. Creditors have until May 12 to file proof of claims. The university quickly shuttered last September after its accreditor, ACICS, was decertified by the U.S. Department of Education for failing to meet federal standards, and Stratford failed to find a new accrediting institution. The decertification meant that Stratford — which at the time operated campuses in Woodbridge, Alexandria and Baltimore — could no longer accept federal student loans, the main revenue source for for-profit colleges. At the time, Stratford President Richard Shurtz said that without that revenue, the college could not continue to operate. The college referred its roughly 800 nursing students to other nearby for-profit colleges to transfer, but representatives for those colleges said that most of their credits would not transfer with them.

A retail venture that built a business giving second life to famous brands like RadioShack and Pier 1 Imports after they closed their stores in bankruptcy now faces its own financial struggles and has hired restructuring lawyers, WSJ Pro Bankruptcy reported. Retail Ecommerce Ventures LLC, known for reviving distressed retail brands as online-only businesses, has been working with lawyers from Kirkland & Ellis LLP to explore options including a financial restructuring, people familiar with the matter said. The firm, founded by entrepreneurs Alex Mehr and Tai Lopez, recently told its investors it would pause payments on its debt, according to a lawsuit filed against it earlier this week. Retail Ecommerce Ventures also is working with investment bank Piper Sandler Cos. and financial adviser Riveron Consulting LLC. The bankruptcies of a handful of retailers at the start of the COVID-19 pandemic provided the firm with the opportunity to snap up a number of national and regional brands in 2020, including Pier 1, Modell’s Sporting Goods and Stein Mart. The firm’s founding entrepreneurs cast Retail Ecommerce as a way to leverage the brands into new, online-only businesses that would live on after they closed down their bricks-and-mortar stores. The firm allegedly reneged on a $5.3 million deal to buy GetSwift Inc., a workforce management and logistics software company, out of chapter 11 in October, according to a lawsuit filed on Monday by GetSwift’s bankruptcy lawyers. Retail Ecommerce pulled out of the agreement after informing investors that it would suspend payments on its notes and preferred shares, the lawsuit said.

Vice has named a well-known restructuring guru to its board amid speculation that the company could be on the verge of bankruptcy, the New York Post reported. After more than a year of trying to sell itself, Vice has brought in Mo Meghji — who served as Chief Restructuring Officer for Sears and Barney’s — to the board. “Oftentimes, large, troubled companies will bring a restructuring expert to the board to guide the company through this process,” said Perry Mandarino, co-head of restructuring and at B. Riley Securities. The move reveals a new level of desperation and an increasing likelihood Vice will be chopped up and sold in pieces with shareholders being wiped out. Vice previously retained FTI and AlixPartners to explore restructuring. FTI is now suing to recover $1 million in fees.