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Sullivan & Cromwell LLP, the law firm FTX tapped to steer it through bankruptcy, is facing scrutiny from federal lawmakers over whether its lawyers knew about problems at the cryptocurrency exchange before the company collapsed and co-founder Sam Bankman-Fried was charged with fraud, WSJ Pro Bankruptcy reported. A bipartisan group of U.S. senators said in a letter Monday that Sullivan & Cromwell should disclose whether its lawyers suspected fraud at FTX or had concerns about the company’s lacking appropriate legal controls before it filed for chapter 11 in early November. Law firms seeking to work in chapter 11 are required under bankruptcy rules to disclose any past representations that could pose a conflict of interest before they can be officially retained. Sullivan & Cromwell worked for FTX before its collapse, charging more than $8.5 million in legal fees before the bankruptcy, according to the law firm’s retention application. Companies commonly use existing law firms to handle bankruptcy filings, but the arrest of Mr. Bankman-Fried and other former FTX executives has drawn lawmakers’ attention to Sullivan & Cromwell’s prior work for the exchange. Four U.S. senators cited their concerns with the law firm in a letter urging Judge John Dorsey of the U.S. Bankruptcy Court in Wilmington, Del., who is overseeing the FTX case, to appoint an independent examiner to review how and why FTX failed.

Voyager Digital won court approval to sell its crypto platform to Binance.US for $20 million as part of Voyager’s plan to liquidate in bankruptcy, Bloomberg News reported. Under terms of the deal, about $1 billion worth of assets that Voyager holds on behalf of customers would be taken over by Binance, which will then give account holders the option to cash out. The deal cannot close until U.S. Bankruptcy Judge Michael E. Wiles approves the related bankruptcy liquidation plan. Customers will have the right to vote on the Binance deal in the coming weeks when they are asked to consider supporting the liquidation plan, Voyager lawyer Christine A. Okike said during a court hearing held by telephone yesterday. Judge Wiles overruled objections from federal regulators and a handful of states, which questioned whether Binance was financially stable enough to close the proposed transaction and how the company would fulfill its pledge to cash out customers. Once minor wording changes are made, Wiles said he would sign a final order allowing Voyager to enter a contract with Binance and to send creditors an outline of the deal and the liquidation plan for a vote.

Coinbase Global said in an SEC filing yesterday it would lay off approximately 20% of its staff, or around 950 employees, as part of larger cost-cutting measures amid continued turbulence in the cryptocurrency industry, YahooFinance.com reported. "In 2022, the crypto market trended downwards along with the broader macroeconomy," Coinbase CEO Brian Armstrong said in a blog post. "We also saw the fallout from unscrupulous actors in the industry, and there could still be further contagion.... In the face of increasingly challenging economic conditions, we made the difficult decision to further reduce the size of our teams to ensure we have the appropriate operational efficiency to weather downturns in the crypto market, and capture opportunities that may emerge." With this third round of layoffs for the firm, the company has cut 2,110 workers since June 2022 and projects it will slash operating expenses by around 25% for the first quarter compared to Q4 of 2022. The company said it intends to complete the overall cost-cutting plan by the second quarter of this year. Coinbase said it estimates it will pay between $149 million to $163 million in total restructuring costs. The company further broke that down into $58 million to $68 million in cash charges for employee severance and termination benefits, with $91 million to $95 million in expenditures being paid out as stock-based compensation.

Bed Bath & Beyond Inc.’s faster-than-expected decline toward bankruptcy happened in large part because suppliers began to ask for increasingly stringent payment terms and credit requirements heading into the pivotal holiday shopping season, Bloomberg News reported. The cash-strapped retailer sometimes struggled to meet those demands, said the people, who asked not to be identified discussing private information. Other suppliers, worried about the financial future of one of the largest U.S. home-goods retailers, halted shipments altogether. The result was fewer products on the shelves just as consumers were looking to spend more. The paucity of products accelerated a vicious cycle that Bed Bath & Beyond is still trapped in, with no clear way to escape: It’s unable to get the products it needs to sell to the falling number of shoppers who have continued to visit its 900 or so stores across the U.S. Unable to find what they want, many consumers have stopped going to Bed Bath & Beyond, leading to an even greater drop in sales. That decline has made it harder to pay suppliers.

Former FTX engineering chief Nishad Singh met with federal prosecutors in a bid to become the third member of Sam Bankman-Fried’s inner circle to seek a cooperation deal in the fraud case over the cryptocurrency exchange’s collapse, Bloomberg News reported. Singh, who has not been accused of wrongdoing, attended a so-called proffer session last week at the Southern District of New York U.S. Attorney’s Office, according to people familiar with the matter. At such meetings, individuals are usually granted a limited immunity to share what they know with prosecutors. A proffer session doesn’t automatically lead to a cooperation agreement. Prosecutors must weigh the value of Singh’s information before deciding whether to offer him a deal that could see him plead guilty and cooperate in exchange for possible leniency. A Singh cooperation deal would leave Bankman-Fried, who pleaded not guilty to eight criminal counts last week, increasingly isolated. Caroline Ellison, who was the chief executive of FTX’s hedge fund arm Alameda Research, and Gary Wang, FTX’s co-founder, have pleaded guilty to fraud charges and are working with authorities.

United Furniture Industries Inc. has filed for chapter 11 protection in an attempt to avoid an involuntary liquidation sought by its largest creditor, Wells Fargo & Co., the Winston-Salem (N.C.) Journal reported. Separately, United has filed its response to Wells Fargo's petition, saying it is "founded upon false and misleading statements" and is "premised on inaccurate and grossly misleading allegation." Both motions were filed in the Northern District of Mississippi. Federal bankruptcy Judge Selene Maddox set a 10 a.m. Friday hearing on the chapter 11 corporate restructuring motion. Maddox did not conduct a hearing Friday into the chapter 7 liquidating motion. United made promotional- to mid-priced upholstered furniture in the U.S. under its brand and the Lane Home Furnishings brand. The manufacturer also imported wooden bedroom and dining furniture. The United motions are the first formal legal response from United since it unexpectedly shut down on Nov. 22.

UK-based energy services provider Altera Infrastructure has emerged from chapter 11 bankruptcy, a few months after filing for it, Offshore-Energy.biz reported. Thanks to a charter for an FPSO, which is expected to be deployed at one of the largest undeveloped oil fields in the UK, the firm expects to strengthen its balance sheet further, as it sees this as a foundation for long-term growth if this project goes ahead. Back in August 2022, Altera Infrastructure, formerly a part of Teekay, entered a chapter 11 bankruptcy process in the U.S. to address its debt of over $1.5 billion. As explained at the time, the firm executed a restructuring support agreement (the RSA) with approximately 71 per cent of its funded debt obligations, which included an investment management company Brookfield and a super-majority of its bank lenders. Altera Shuttle Tankers and FPSO joint ventures were not part of the restructuring process. In an update on Monday, Altera Infrastructure revealed that it has emerged from the chapter 11 process in the U.S. Bankruptcy Court for the Southern District of Texas after consummating its chapter 11 plan of reorganisation. This restructuring, which was consummated approximately five months after the chapter 11 process started, addressed more than $1 billion of secured and unsecured holding company debt, $400 million of preferred equity, and $550 million of secured asset-level bank debt, including unsecured guarantees of such debt issued by the firm.
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