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Barry Silbert and his Digital Currency Group are seeking dismissal from New York state’s $3 billion civil lawsuit over a failed crypto lending program, saying their alleged role in the matter rests on a “thin web of baseless innuendo,” Bloomberg News reported. The suit, filed last year, accuses DCG and Silbert of misleading customers about the safety of the now-defunct program, called Gemini Earn, which was a venture between DCG’s Genesis Global Capital unit and crypto exchange Gemini Trust Co., founded by brothers Tyler Winklevoss and Cameron Winklevoss. In a filing Wednesday in Manhattan, DCG said it should be dismissed from the case, arguing that its only connection to the alleged fraud against Gemini Earn customers boils down to “vague” statements and a few “retweets” surrounding its effort to support Genesis during the 2022 crypto crisis. “If this case proceeds, the facts will show that DCG did nothing wrong, and that it acted properly, with the best of intentions, based on the sound, considered advice of accountants, investment bankers, consultants and other advisors from elite firms with the highest of reputations,” DCG said in the filing. A representative for New York Attorney General Letitia James, who filed the suit, referred on Wednesday to an earlier statement about the case, when the state said it had “pulled the curtain back” on DCG. The suit was initially filed in October seeking $1.1 billion. It was amended in February to seek another $2 billion in restitution after James said additional DCG investors had come forward to claim they were misled about the safety of their investments. The amended suit didn’t include new allegations against Gemini. The state accuses Gemini and Genesis of failing to disclose to investors the risks of Gemini Earn, which they started in 2021. In February, Genesis Global Holdco LLC, the holding company for the DCG unit, settled with the state, which claimed the bankrupt crypto lender had defrauded Gemini Earn customers.

Bus operator Coach USA is exploring financial restructuring options including a potential bankruptcy as its business has suffered since the pandemic, WSJ Pro Bankruptcy reported. Coach, which bills itself as the largest privately-owned bus company in the nation, has engaged Houlihan Lokey as a financial adviser, Alston & Bird as restructuring counsel, and CR3 Partners as a restructuring adviser, the people said. The New Jersey-based company has struggled to recover from a decline in ridership following the onset of Covid-19, they said. Private-equity firm Variant Equity acquired Coach USA in 2019 from Stagecoach Group in a transaction valued at $271 million. Stagecoach bought Coach USA in 1999 for $1.24 billion. Coach USA, which has been operating for more than 100 years, has 27 locations throughout the U.S. and Canada, more than 3,000 employees and 2,250 buses, according to its website. The company also owns and operates the Megabus intercity bus lines.

Spirit Airlines Inc. bondholders, growing increasingly worried about the company’s ability to manage its more than $3 billion of borrowings, are mapping out a strategy that they think may insulate them from devastating losses in the event the air carrier can’t repay its obligations, Bloomberg News reported. The plan, dubbed a “triple-dip” by some of the creditors, would aim to capitalize on a series of moves the airline made during a 2020 bond sale. Certain company units sold notes backed by Spirit’s loyalty program and intellectual property, and sent proceeds of the deal to the airline’s parent company, which also guaranteed the debt. The mechanics of the deal resemble a structure known as the “double-dip” that has helped struggling companies raise fresh financing in exchange for giving lenders two claims on the company’s assets. In Spirit’s case, the bondholders believe they have three claims — to Spirit’s guarantee, the intercompany loan and the loyalty program and related assets. A “triple-dip” hasn’t yet been tested in court, but “double-dip” creditors have ended up with improved recoveries in past bankruptcies.

Commercial real estate lender New York Community Bancorp received an equity investment of more than $1 billion, gaining a vote of confidence in the struggling lender from investors including former US Treasury Secretary Steven Mnuchin, Bloomberg News reported. The capital injection was led by Mnuchin’s Liberty Strategic Capital, Hudson Bay Capital and Reverence Capital Partners, NYCB said in a statement Wednesday, confirming an earlier Bloomberg News report. The shares erased an earlier plunge after the announcement. “In evaluating this investment, we were mindful of the bank’s credit risk profile,” Mnuchin said in the statement. “With the over $1 billion of capital invested in the bank, we believe we now have sufficient capital should reserves need to be increased in the future to be consistent with or above the coverage ratio of NYCB’s large bank peers.” NYCB also named Joseph Otting, the former comptroller of the currency, as its new chief executive officer. Otting replaces Alessandro DiNello, who became CEO on Feb. 29. DiNello will stay on as non-executive chairman. Liberty, which counts Saudi Arabia’s Public Investment Fund among its backers, will invest $450 million. Other investors include Hudson Bay at $250 million and Reverence at $200 million, according to the statement. In connection with the deal, NYCB will add four new directors to its board, including Mnuchin and Otting.

The flagging shares of America's largest wood-pellet exporter got a lift after Enviva said it had agreed to extend a forbearance agreement with creditors through March 11, the Wall Street Journal reported. The forbearance agreement that Enviva struck last month after missing a bond payment expired. Enviva's shares, which reached nearly $90 in 2022, have traded for less than $1 this year. They rose by more than 30% on Tuesday. Enviva is preparing to file for bankruptcy protection following a wrong-way bet on the price of the power-plant fuel that caused nine-figure losses. In addition to the forbearance extension, Enviva told investors in a securities filing that they should no longer rely on its financial reports for the first three quarters of 2023, which it said would be restated. "This conclusion was based principally on the need to correct the classification of approximately $33 million recoverable from customers for certain handling costs that the company incurred at discharge ports for its wood pellet shipments," Enviva said in the filing.

The Brazilian airline Azul SA is working with Citigroup Inc. and Guggenheim Partners as it explores a potential offer for its troubled competitor Gol Linhas Aereas Inteligentes SA, Bloomberg News reported. Shares in both companies rallied. The companies are advising Azul as it weighs several options, including an outright acquisition of its rival. Azul still could decide to shelve the idea. Any offer would need approval from the country’s regulator — known as Cade. A tie-up between Azul and Gol would help them cut costs and boost revenue, helping support share prices, Bradesco BBI analyst led by Victor Mizusaki wrote in a note. Sao Paulo-based Gol filed for chapter 11 after grappling with $2.7 billion in near-term liabilities and carrying out a dozen debt exchanges. Under the process, it has managed to increase its debtor-in-possession financing to $1 billion from $950 million. Moody’s Investors Service on Tuesday upgraded Gol parent Abra Group’s credit rating to Caa1 from Caa3 and lifted the outlook to stable from negative. The upgrade hinged on Gol securing the $1 billion DIP financing, the ratings company said.

The founder of a small Florida hedge fund could be jailed for refusing to reveal where Indian tech firm Think & Learn Pvt allegedly hid $533 million that lenders are trying to recover, according to a federal judge, Bloomberg News reported. William C. Morton could be locked up for contempt of court if he can’t explain why he disobeyed a court order to provide details about the money, which was briefly placed with his hedge fund, Camshaft Capital Fund. Bankruptcy Judge John Dorsey scheduled a hearing for later this month in Delaware to decide what should happen to the founder for defying a court order. “I want to make sure it is absolutely clear to Mr. Morton that one of the possible remedies is civil confinement if he doesn’t comply,” said Judge Dorsey, referring to the federal rules that allow judges in non-criminal cases to jail people. Morton has recently hired criminal lawyers to represent him, Pieter Van Tol, one of his attorneys, told Judge Dorsey during a bankruptcy hearing Monday. Dorsey said he warned the hedge fund founder during a hearing last week that “it would be in his best interest” to attend today’s proceeding in Wilmington, Del. Instead, Morton left the country during the middle of last week’s hearing, Van Tol told Judge Dorsey. “We advised Mr. Morton that he should produce the information, that he should produce the documents and he declined,” Van Tol said during Monday’s hearing.

Commercial chapter 11 bankruptcy filings climbed 118 percent in February 2024, with 882 filings versus the 377 filings in February 2023, according to data provided by Epiq Bankruptcy, the leading provider of U.S. bankruptcy filing data. The sizable increase in commercial chapter 11 filings in February was spurred by a large number of related filings in the Thrasio and Hornblower Holdings proceedings. Total February commercial filings increased 48 percent to 2,546 from the 1,720 commercial filings in February 2023. Small business filings, captured as subchapter V elections within chapter 11, increased 78 percent to 213 in February 2024, up from 120 the previous year. Total bankruptcy filings were 39,014 in February 2024, a 22 percent increase from the February 2023 total of 31,909. February marks 19 consecutive months that total, individual, and commercial bankruptcy filings have registered monthly year-over-year increases. Individual bankruptcy filings increased 21 percent in February to 36,468, up from the February 2023 individual filing total of 30,189. There were 21,158 individual chapter 7 filings in February 2024, a 25 percent increase over the 15,717 filings recorded in February 2023, and there were 14,871 individual chapter 13 filings in February 2024, a 9 percent increase over the 13,678 filings last February.

Home-fitness company BowFlex has filed for chapter 11 bankruptcy with a deal in hand to be acquired by specialty fitness retailer Johnson Health Tech, WSJ Pro Bankruptcy reported. BowFlex today said that it has secured a commitment for $25 million in debtor-in-possession financing that will allow the Vancouver, Wash., company to continue operating in a normal course and to fulfill customer orders during the bankruptcy process. Taiwan’s Johnson Health Tech will act as the stalking horse, or lead, bidder in a court-supervised auction for BowFlex with a bid of $37.5 million in cash for substantially all of the company’s assets. BowFlex said that multiple parties have indicated an interest in bidding for the company. Johnson Health Tech, whose fitness brands include Matrix, Horizon Fitness and Vision Fitness, operates more than 460 locations in Asia, Europe and the Americas. BowFlex said that it initiated the chapter 11 proceeding in the U.S. Bankruptcy Court for the District of New Jersey.