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Cerberus Capital Management LP said the bankruptcy filing of borrower Stanadyne LLC was “totally unnecessary” and surprising because an out-of-court restructuring was already in the works and chapter 11 costs will destroy value, WSJ Bankruptcy reported. The auto parts maker sought protection from creditors last week, saying it was “crippled” by the rising costs of $273 million of variable-rate debt owed to top creditor Cerberus after interest rates increased. During Stanadyne’s debut appearance Wednesday in the U.S. Bankruptcy Court in Wilmington, Del., Cerberus lawyer Laura Davis Jones said Stanadyne shouldn’t have filed for bankruptcy. “It took us by surprise,” she said, saying Cerberus was “a little misled.” Stanadyne faced no judgments or “liquidity wall,” nor was it in default at the time of the filing, Ms. Jones said. The company had basically agreed on a term sheet for an out-of-court restructuring, she said. Jones called the bankruptcy “value-destructive” because of the “significant fees” Stanadyne will incur in court. Judge John Dorsey asked Stanadyne representatives whether they wanted to respond. They declined, saying that it wasn’t the right time. Judge Dorsey weighed in, though. “At this point, I’ll say what my colleague Judge Shannon always says: ‘It is what it is, and we are where we are,’ so let’s just move forward,” Judge Dorsey said, referring to Judge Brendan Shannon. Stanadyne lawyer Kathryn Coleman said at the hearing that growth in the Jacksonville, N.C.-based company’s operating income couldn’t match the “explosion” in the company’s interest rates. Stanadyne intends to reorganize and will return to court seeking approval to hire an investment banker, she said.

Lenders to Revlon Inc. eased the way for its exit from bankruptcy by settling their lawsuit over a 2020 debt deal that stripped their collateral and sent it to a rival creditor group, WSJ Pro Bankruptcy reported. The bankrupt beauty-products business said the agreement between the company and its primary creditor groups would put Revlon on a clear path to exiting chapter 11 with $2.7 billion less in debt. The proposed settlement positions Angelo Gordon & Co., Glendon Capital Management LP and other lenders to take control of Revlon following the debt deal they engineered that sparked years of litigation with other creditors. Creditors that challenged the 2020 deal agreed to accept their share of an 18% stake in the restructured company or a $56 million cash pool to walk away from the lawsuit. They could recover at least 17% of their claims, if they take cash, and potentially as much as 25%, if they participate in an equity-buying program to provide Revlon with $670 million in fresh equity capital upon its exit from chapter 11. A previous estimate showed their recoveries at up to roughly 13%. Judge David Jones of the U.S. Bankruptcy Court in New York had largely dismissed a lawsuit challenging the 2020 debt deal, which transferred intellectual property collateral from existing Revlon lenders to Angelo Gordon and other participants. Last week, the judge said the plaintiff lenders’ claims against Revlon were barred by bankruptcy law and that their remaining claims against rival lenders appeared to be on shaky legal ground.

Sam Bankman-Fried is resisting efforts to make him testify in the bankruptcy case of the digital asset lender Voyager Digital Ltd, Bloomberg News reported. Lawyers for the co-founder of FTX, the cryptocurrency exchange that collapsed causing billions of dollars in losses, asked a federal judge in California Tuesday to block a subpoena from lawyers representing unsecured creditors in the bankruptcy case underway in New York. The subpoena calls for Bankman-Fried to appear in person Feb. 23 at the San Francisco offices of McDermott Will & Emery to answer questions, and it included 49 separate and wide-ranging document requests to be turned over by Feb. 20. Bankman-Fried’s lawyer, Marc R. Lewis, argued the subpoena should be quashed because it wasn’t properly served, it’s unreasonable, and it may require the FTX chief executive officer to invoke his Fifth Amendment constitutional right to avoid incriminating himself. The subpoena was delivered to Bankman-Fried’s mother at his parents’ house in California, but Sam wasn’t there because he was attending a bail hearing in his New York criminal case, according to the filing. Alameda Research Ltd., Bankman-Fried’s defunct crypto trading house, is attempting to claw back about $446 million from Voyager Digital. The funds are related to cryptocurrency loans Voyager provided to Alameda before Voyager filed for bankruptcy in July.

Crypto lender BlockFi Inc. has asked for a court ruling stripping Sam Bankman-Fried ‘s offshore investment vehicle of the protections of chapter 11, citing the recent seizure of its assets by federal prosecutors, WSJ Pro Bankruptcy reported. BlockFi, itself bankrupt since November, sought Thursday to dismiss the bankruptcy case of Emergent Fidelity Technologies Ltd., the offshore investment vehicle that Mr. Bankman-Fried used to purchase a 7.6% stake in Robinhood Markets Inc. The chapter 11 case serves little purpose and was only filed to undermine BlockFi’s claim to the Robinhood shares, according to BlockFi’s motion in the U.S. Bankruptcy Court in Wilmington, Del. Court-appointed liquidators in Antigua and Barbuda, where Emergent is based, placed it under chapter 11 earlier this month after federal prosecutors seized its Robinhood stake and cash holdings. BlockFi said in its filing that Emergent has no property to administer that would qualify it for chapter 11 and only filed bankruptcy as a litigation tactic. BlockFi has staked a claim to the Robinhood shares as collateral for $600 million in loans it made to Mr. Bankman-Fried’s crypto trading firm Alameda Research. The new management team guiding FTX and Alameda through their own chapter 11 cases has also claimed an interest in Emergent’s assets, which now sit in a government-controlled account.

Ohio lawmakers have revived bipartisan legislation that would level the playing field for Ohioans who were sexually abused by Boy Scout leaders and want to seek financial relief from the organization, the Columbus (Ohio) Dispatch reported. Ohio House Bill 35, introduced last week by Reps. Bill Seitz, R-Cincinnati, and Jessica Miranda, D-Forest Park, stems from rules laid out in the Boy Scouts of America's bankruptcy settlement. It would scrap Ohio's civil statute of limitations for child sex abuse in bankruptcy cases, allowing survivors to recoup the full amount owed to them. The House passed the bill late last year, but it failed to clear the Senate during the Legislature's lame-duck session. That means Seitz and Miranda are starting from scratch. Boy Scouts of America filed for bankruptcy in 2020 as it faced hundreds of lawsuits across the country from former scouts who said they were molested and raped by leaders and volunteers. Nearly 2,000 abuse claims have been filed in Ohio alone. The settlement, approved in September, allows survivors to apply for a $3,500 expedited payout. Alternatively, survivors can pursue an independent review or see where they fall on a matrix that doles out money based on the severity and frequency of abuse. For those two options, the state's statute of limitations is a key factor. In Ohio, survivors of child sex abuse have until age 30 to file a lawsuit against the perpetrator or affiliated institution. Per the settlement rules, Ohio's current law would limit survivors to 30% to 45% of what they're eligible for under the matrix. They would not qualify for an independent review.

Cryptocurrency executives had hoped that 2023 would herald a new beginning after a year of disastrous setbacks. Instead, the industry has found itself on the receiving end of an aggressive government crackdown, the New York Times reported. Last month, the Securities and Exchange Commission levied fines and other penalties against crypto lending firms, while federal banking officials issued policy statements that appeared calculated to make it harder for crypto companies to participate in the mainstream finance system. In the last few days, the pace has accelerated. Two high-profile crypto firms — including a popular exchange where people buy and sell digital coins — came under intense pressure from state and federal regulators. After announcing a settlement with the exchange, the S.E.C. also fined a crypto promoter and sued a start-up that issued digital coins, for a total of three enforcements in just over a week. The actions are likely a prelude to a protracted spell of legal wrangling, as regulators respond to the market turmoil that caused prominent crypto companies to file for bankruptcy last year and cost investors billions of dollars. And the enforcement signals a growing urgency in Washington, D.C., to address the threat posed by cryptocurrencies, an experimental technology that enables new forms of financial speculation. For years, regulators were criticized for failing to come to grips with the crypto industry, even as it grew into a multitrillion-dollar business. In November, the FTX crypto exchange, once regarded as one of the most reliable firms in the freewheeling industry, failed practically overnight, and its founder, Sam Bankman-Fried, was charged with orchestrating a yearslong fraud. That put regulators under intense pressure to act. Crypto companies have long existed in a legal gray area, with legislators and government officials debating how they should be classified for regulation. The industry’s growth has outstripped the slow-moving federal bureaucracies that oversee the other parts of the finance industry, like traditional banks and publicly traded companies.

A federal judge showed growing impatience Thursday with FTX founder Sam Bankman-Fried’s use of the internet, suggesting that incarceration might eventually be the most effective way to prevent him from violating his bail conditions by communicating on electronic devices in ways that can't be traced, the Associated Press reported. Judge Lewis A. Kaplan did not immediately change a $250 million bail package that lets Bankman-Fried live with his parents in Palo Alto, California, while preparing for trial on charges that he cheated investors and looted customer deposits at FTX, his cryptocurrency trading platform. But he raised the possibility for the first time that jail might be the only way to ensure Bankman-Fried won't outfox the government with ways to use electronic devices in ways that can't be tracked. “There is a solution, but it’s not one anybody’s proposed yet,” Kaplan said as Bankman-Fried sat passively at the defense table. He then noted that there may be many devices in Bankman-Fried's family home that the government will not be tracking, even with any new rules imposed on his bail conditions.