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Genesis Global on Wednesday won a court ruling confirming its ownership of 31.2 million shares of Grayscale Bitcoin Trust, a windfall for the bankrupt cryptocurrency lender’s creditors, WSJ Pro Bankruptcy reported. Crypto exchange Gemini Trust in October sued Genesis, its former business partner, over the shares, saying they were pledged as collateral on loans to Genesis from customers in Gemini’s Earn investment program. The shares are now worth more than $1.2 billion as the price of bitcoin, the fund’s underlying asset, has more than doubled since Genesis filed for bankruptcy. In August 2022, Genesis offered Gemini about 30.9 million shares of Grayscale Bitcoin Trust to secure $1.2 billion in loans from Gemini Earn users. Three months later, as the industry’s troubles deepened following the collapse of crypto exchange FTX, Genesis Global agreed to offer an additional 31.2 million shares as collateral. But those shares in dispute were never transferred to Gemini or Earn users. Judge Sean Lane with the U.S. Bankruptcy Court in White Plains, N.Y., said in his written decision Wednesday that the Grayscale shares held in bankruptcy belong to Genesis because they were never transferred and dismissed Gemini Trust’s assertion to claim ownership of the shares.
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In related news, Genesis Global Holdco LLC has settled a lawsuit brought by New York’s top law enforcement official alleging the bankrupt crypto lender defrauded customers of its now-terminated Gemini Earn program, which was run jointly with Gemini Trust Co., Bloomberg News reported. The settlement with New York Attorney General Letitia James is structured so that assets that could have otherwise gone to state authorities will instead be returned to former Earn customers and other Genesis creditors. The deal must be approved by a bankruptcy judge and follows a settlement Genesis struck resolving a separate complaint over the Earn program brought by the US Securities and Exchange Commission. James sued Genesis, its parent company Digital Currency Group and Gemini last October, accusing the crypto firms of defrauding customers of $1.1 billion. The settlement disclosed Thursday in New York bankruptcy court only resolves allegations against Genesis, according to court documents. The companies have denied wrongdoing and Genesis is settling the allegations without admitting liability. Genesis, which intends to liquidate, also agreed it will no longer do business in New York.
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The U.S. Bankruptcy Court in New Jersey, an emerging hot spot for companies filing large chapter 11 cases such as Rite Aid and WeWork, said yesterday that it will continue to randomly assign cases among its judges rather than directing large cases to just one or two judges, Reuters reported. Chief Judge Michael Kaplan in Trenton addressed his court's case assignment rules in response to a letter from creditor rights advocates, including the Creditor Rights Coalition and several law professors, who urged the court not to create a specialized "complex case" panel during an upcoming rewrite of the court’s rules for handling chapter 11 cases. "Our District will never change our rules to create 'complex case panels' or limit assignment of cases in any fashion," Kaplan wrote in an email to the creditor group that Reuters reviewed. "All of our judges are more than capable and experienced to handle complex cases." Judge Kaplan pointed out that all large bankruptcies recently filed in New Jersey, including WeWork, Rite Aid, Bed Bath & Beyond and David's Bridal, have been assigned to different judges.

Sinclair Inc. is exploring bringing in an equity partner for the Tennis Channel as well as other strategic alternatives for the network, FrontOfficeSports.com reported. The tennis-specific network, which celebrated its 20th anniversary last year, offers the most concentrated single-sport coverage anywhere in television, broadcasting nearly 5,000 hours in 2023. In the third quarter of 2023, Sinclair’s tennis segment, which includes the Tennis Channel, the network’s streaming operations, and Tennis.com, reported $59 million in revenue, up by 9%, and $13 million in operating income, up 18%, beating prior Sinclair guidance and representing a bright spot for the company. Sinclair is now projecting full-year Tennis Channel revenue to reach $226 million and adjusted earnings of at least $61 million. That performance, speaking in part to the rising global profile of tennis, has occurred despite ongoing cord-cutting continuing to dramatically reshape the entire sports media landscape. Based in part on those results, the strategic review of the Tennis Channel is being prompted largely by inbound interest in the network. Sinclair, which purchased the Tennis Channel in 2016 for $350 million, has hired investment bank Moelis & Co. to handle inquiries. he move could see Sinclair further reduce its profile in sports. Already, its regional sports network subsidiary Diamond Sports Group is in chapter 11 protection and attempting a three-pronged recovery plan after expectations had previously grown toward an eventual shuttering of that company.

A group of shareholders of bankrupt Ebix is seeking to appoint an official committee to represent its interests in the software and e-commerce services supplier’s chapter 11, saying that the company’s stock still has value, WSJ Pro Bankruptcy reported. The group owning 18% of Ebix stock made a request on Tuesday in the U.S. Bankruptcy Court for the Northern District of Texas, asking Judge Scott Everett to order the U.S. Trustee, the Justice Department’s bankruptcy watchdog, to appoint an official committee of equity holders. These equity holders said the stock market views Ebix as a solvent business and the stock is currently trading at roughly $2.40 a share, indicating a market capitalization of roughly $74 million. Also, “insiders and sophisticated investors are accumulating shares,” the equity group said. It pointed out, for example, that, days after the bankruptcy, Ebix director George Hebard bought 409,000 shares for roughly $1 apiece. The official unsecured creditors' committee in the Ebix bankruptcy, however, has said that the appointment of an equity committee shouldn’t be considered “at this time,” saying either the company itself or the creditor committee could protect shareholder interests.

King State Coffee has filed for chapter 11 reorganization after months of business interruptions caused by a slow-moving construction project on Floribraska Avenue in Tampa, the Tampa Bay Business Journal reported. The popular Tampa brewery and coffee shop has between $1 million and $10 million in liabilities, including around $500,000 in estimated unsecured claims, according to court documents filed on Feb. 2. Owners Nate Young and Tim McTague said that they filed for bankruptcy protections to adjust the business in anticipation that disruption from the project will not be resolved until at least April, if not longer. They initially raised concerns about the lack of urgency around the construction with city officials in January and requested financial assistance to shore up operations. The city referred that claim to JVS Contracting Inc., the company leading the project, but a decision on whether or how much King State is owed has not been reached, Young and McTague said.

Fells Point Tavern is no longer serving customers, and the Thames Street restaurant’s ownership agreed to vacate the premises by Feb. 15 as it endures lengthy bankruptcy litigation, the Baltimore Sun reported. The business’s attorney in U.S. Bankruptcy Court, Robert Scarlett, said yesterday that he and his client, tavern owner Vasilios Keramidas, voluntarily decided to give up the premises after they couldn’t agree with the restaurant’s landlord. According to court documents, Keramidas has not made any of his $21,000 monthly rent payments since October and owes property owners Thames Property LLC over $395,000 in unpaid rent, late fees and utilities since the lease started in June 2021. Doing business as Kali’s Court LLC, Keramidas filed for bankruptcy in the spring of 2023, stating that the restaurant owed hundreds of thousands of dollars to the IRS and the Maryland Office of the Comptroller as well as the U.S. Small Business Administration. Keramidas’ attorney said the business was one of “an array of” restaurants in Baltimore that suffered from the coronavirus pandemic, which started in March 2020, struggles he said led to the restaurant filing for bankruptcy in May. Their application noted that $160,000 in rent was past due, and their monthly payment needed to be renegotiated and is still pending nearly seven months later. The business’s landlord filed a motion in November asking a bankruptcy court judge to order the restaurant to turn over the property, alleging that the restaurant had paid only $25,400 against nearly $198,000 that had come due in the months since filing the petition.

Adam Neumann, the former chief executive and co-founder of WeWork, is trying to regain control of the bankrupt co-working company less than five years after the board forced him out, WSJ Pro Bankruptcy reported. On Monday, Neumann’s lawyers sent a letter to WeWork’s advisers saying that he is partnering with Dan Loeb’s Third Point hedge-fund firm and other investors in exploring a bid for the company. That effort is already facing challenges. Some WeWork creditors have signaled they are ready to sell the firm after it exits chapter 11, according to people familiar with the matter. But WeWork executives have been cool to Neumann’s interest. They have shut him out from information he would need to submit a bid for the company since he initially approached WeWork in December, according to Neumann’s letter that was reviewed by The Wall Street Journal. It also isn’t clear how committed Third Point is to working with Neumann on a WeWork acquisition. A Third Point spokeswoman said the hedge fund “has not made a commitment to participate in any transaction” and had “only preliminary conversations” with Flow Global, Neumann’s real-estate company. WeWork lawyers said on Monday that the company is running short on cash and needs more money to get through its costly chapter 11 cases. In Neumann’s letter to WeWork, he said the current financial crunch was caused by the management’s lack of ability to “explore alternatives” for financial support.

Rudy Giuliani, the bankrupt former New York City mayor, owes more than $1 million in unpaid taxes, according to a Monday bankruptcy court filing, WSJ Pro Bankruptcy reported. Giuliani owes over $720,000 to the IRS Centralized Insolvency Operation, which helps handle bankruptcy matters for the federal tax agency. He also owes more than $280,000 in unpaid taxes to the state and the city of New York, the filing shows. Aside from taxes, Giuliani’s debts also include $9,530 owed for an overdraft on a Citigold checking account and $647 owed to Trump International Golf Club in West Palm Beach, Fla., for membership dues. Giuliani sought protection from creditors in December after a court ordered him to pay nearly $150 million to two Georgia election workers after finding that he defamed them with lies that they committed election fraud. Last month the bankruptcy court gave Giuliani permission to challenge the defamation verdict. In court filings last month he listed more than $10.6 million in assets.

WeWork may be forced to take on a new bankruptcy loan to make up for slower-than-expected progress on rent negotiations, an attorney for the shared office space provider said yesterday, Reuters reported. WeWork's post-bankruptcy business plan is premised on a significant reduction in future rent costs from its landlords, and WeWork is at a crossroads in that effort, according to attorneys for WeWork and its landlords who spoke at a bankruptcy court hearing in Newark, N.J. Several of WeWork's landlords decried the company's "hardball tactics", saying that U.S. bankruptcy law requires companies to keep up with rent for properties that they continue to use. Kris Hansen, an attorney representing WeWork creditors, said that WeWork has shown "painfully little progress" in its discussions with landlords, raising doubts about the company's long-term ability to pay its debts. WeWork attorney Steven Serajeddini acknowledged that the company's initial round of negotiations had been headed for "certain failure," but he said WeWork has had more success after withholding as much as $33 million in January rent from certain landlords. WeWork initially believed it could make it through its bankruptcy case using the $164 million of cash it had on hand in November, but it now believes that amount to be insufficient and is considering taking out a new bankruptcy loan, Serajeddini said. A new loan would likely be converted into WeWork equity after the company emerges from bankruptcy, he said.

Bankruptcy Judge Paul Warren said at a hearing last week that neither plan proposed in the Rochester Diocese bankruptcy can move forward for a vote yet, the Rochester Beacon reported. Instead, he set an Apr.16 date for the hearing to be continued. It would be the hearing’s second continuation and third session. Judge Warren had previously called off an early October hearing that was to have dealt with the rival plans. Accounting for much of the complication is that insurance companies balked at payment amounts survivors sought as compensation. By the end of last year only one insurer, the Continental Insurance Co., also known as CNA, had not come to terms. Instead it offered a rival plan of reorganization to a joint plan offered earlier by the diocese and a committee representing survivors. The survivors’ committee has made it clear that it sees CNA’s plan as an inadequate take-it-or- leave-it offer. The court’s go ahead on a vote on one or both plans after the April 16 date assumes the diocese and CNA will have met series of conditions the judge laid out, many having to do with more clearly explaining legal issues to the nearly 500 abuse survivors who account for most of the diocese’s creditors.