Bankrupt crypto lender Genesis Global Holdco LLC is suing Gemini Trust Co. to recover nearly $690 million that Genesis says the crypto platform withdrew from Genesis in the months before the company’s chapter 11 filing in January, Bloomberg News reported. Genesis said in a Tuesday complaint in New York bankruptcy court that the withdrawals made by Gemini were unprecedented and amounted to a run-on-the-bank that came at the expense of the crypto lender’s other creditors. The lawsuit escalates disputes in the bankruptcy between Genesis and Gemini, which collaborated on its Gemini Earn program that let clients collect about 8% interest on their digital-asset holdings. Last month, Gemini sued Genesis in an attempt to determine who rightfully owns a slug of shares in the Grayscale Bitcoin Trust now worth nearly $1.6 billion.
Sandy Hook Elementary School shooting victims’ families proposed that conspiracy theorist Alex Jones wind up his bankruptcy by paying creditors at least $85 million over 10 years or undergo an orderly liquidation, Bloomberg Law reported. The Sandy Hook families, along with an official committee of Jones’ creditors, argued in court papers Wednesday that the 11-month-long bankruptcy case for the right-wing radio host should be brought to a close by February. The creditors laid out a dual-option proposal in light of what they say is Jones’ failure to advance a viable way out of chapter 11 while continuing to enjoy an extravagant lifestyle costing up to $90,000 a month. The plan, as described to the US Bankruptcy Court for the Southern District of Texas, would allow Jones to undergo an orderly liquidation of his assets or adhere to a 10-year fixed-payment plan with distributions of at least $8.5 million a year. Under the fixed-payment plan, the creditors would agree to release their roughly $1.5 billion in state court judgment awards stemming from Jones’ repeated lies that the 2012 massacre of elementary school students and teachers was a hoax. Both options contemplate preserving causes of actions against third parties affiliated with Jones and his Infowars program.
WeWork said on Tuesday that it had secured commitments for up to $682.5 million in debtor-in-possession financing from some of its lenders, weeks after the shared office space provider filed for bankruptcy protection, Reuters reported. The SoftBank-backed company is seeking to address more than $4 billion in debt and unsustainable future rent costs through a bankruptcy plan. WeWork, once the most valuable U.S. startup, struggled to achieve profitability as a rise in work-from-home trends following the pandemic soured demand for its shared office spaces. In a regulatory filing, WeWork disclosed it had entered into a commitment letter on Nov. 15 with parties including Goldman Sachs International Bank, JPMorgan Chase Bank and SoftBank Vision Fund 2 for the financing of a letter-of-credit facility. The financing could be as much as $682.5 million but it could also be smaller than that depending on other conditions, WeWork said, adding that the parties have agreed to provide the financing individually and not jointly.
Lion Star, the private company that operates the Nacogdoches Memorial Hospital, has filed for bankruptcy in federal court after the Nacogdoches County Hospital District voted to terminate its lease with the group last month, CBS19.tv reported. According to a petition filed in U.S. Bankruptcy Court of the Northern District of Texas on Nov. 17, Lion Star owes anywhere between $10 million and $50 million to an estimated 200 to 999 creditors. Another court document that details a list of the 20 largest claims shows Lion Star owes over $2.8 million to a clinical staffing company from Arkansas, over $1 million to an electronic health record company and more then $580,000 to a biomedical services group based in California. Other debts listed include electricity, telephone services and other services and recordkeeping. This bankruptcy filing comes after the Nacogdoches County Hospital District board voted to terminate the 10-year lease agreement with Lion Star on Oct. 13. In the agreement, the district is serving as the landlord while Lion Star is the tenant.
Bankrupt pharmacy chain Rite Aid Corp. has until March 1 to complete its turnaround under a timeline approved by a federal judge yesterday, Bloomberg News reported. Bankruptcy Judge Michael Kaplan scheduled a final hearing that day to decide the fate of the company’s reorganization proposal. The ruling comes after complaints that the case was moving so fast it threatened to harm lower-ranking creditors, including people who claim Rite Aid wrongly sold addictive pain killers. The company, backed by senior lenders, had urged Judge Kaplan to hold the hearing in February, arguing that the longer Rite Aid stays in bankruptcy, the more likely it is to liquidate instead of finding a buyer willing to rescue the retailer. Rite Aid faced pressure from its two official creditor committees to slow the pace of the reorganization. A panel of lower-ranking, unsecured creditors and a group representing opioid victims argued that they need more time to review the $3.45 billion loan package Rite Aid says it needs to help fund its reorganization. The company has filed a proposal built on the assumption Rite Aid will have a successful pair of auctions set for December. The heart of the proposal can’t be finished until after the sale is locked down.
Some owners of WeWork Inc.’s more than 700 properties are objecting to the company’s plans to shut down many of its locations in bankruptcy, Bloomberg News reported. Objections filed yesterday pushed back on the company’s timeline for rejecting leases, and rules they say wrongly favor WeWork. For example, one landlord claims WeWork would retain the right to stay in a location, even after canceling a lease. The filings provide a fresh look at the delicate balance WeWork must strike as it seeks to renegotiate or shed onerous leases, a key part of its bankruptcy plan. It’s in talks with landlords for hundreds of properties about rent cuts and other concessions, and must be careful not to push so aggressively that landlords choose to walk away and seek new occupants. “WeWork is walking a fine line because it has to aggressively cut rent costs in order to reorganize successfully, but at the same time its future depends on maintaining healthy relationships with some of those same landlords if it hopes to strike new agreements with them after emerging from bankruptcy, ” said Evan DuFaux, a special situations analyst at the research firm CreditSights. “The case is likely to turn on the landlords’ strategy regarding renegotiation and rejection of leases.” Regulatory filings show that plans during bankruptcy discussions with creditors involved shuttering nearly half of its U.S. and Canadian locations. The company hasn’t shared new figures since filing for chapter 11, but said in a response to questions from Bloomberg that the disclosed numbers were “outdated” and didn’t reflect the “significant progress” made in talks since then.
Binance and its founder, Changpeng Zhao, pleaded guilty Tuesday to violating criminal anti-money-laundering guidelines — a staggering blow against the world’s largest cryptocurrency exchange, the Washington Post reported. The company will also pay a $4.3 billion fine, one of the largest ever levied against a corporation. The plea agreement marks the second time this month that a giant of the crypto world has been felled by federal charges. Zhao, who appeared Tuesday in U.S. District Court in Seattle, faces as much as 18 months in prison for violating the Bank Secrecy Act, according to sentencing guidelines. He will be fined $50 million and is barred from working with the exchange for three years, court filings show. Zhao also agreed to step down as chief executive of Binance. He will be replaced by Richard Teng, the company’s global head of regional markets.
Changpeng “CZ” Zhao has become the latest in a long line of crypto founders facing potentially significant legal consequences, Bloomberg News reported. The founder of Binance Holdings Ltd., the world’s largest crypto exchange, resigned from his post as CEO as part of a settlement agreement with U.S. prosecutors that includes the possibility of jail time. That makes him the newest member of a club that includes Sam Bankman-Fried of FTX, Alex Mashinsky of Celsius, and Do Kwon of Terraform Labs. Zhao, who founded Binance in 2017, developed a reputation for being a canny operator, a fierce competitor, and someone prone to saying things like “I don’t really care much about money” while amassing a fortune measured in the billions. Zhao’s resignation and his near-simultaneous replacement by Richard Teng, who built his reputation not in crypto but at Singapore’s central bank, is emblematic of the kind of shift in approach being pushed by regulators around the world. The landscape for digital assets appears to be shifting away from the “wild west” of crypto populated by risk-loving cowboys who seek forgiveness instead of permission, who publicly spar with the liquidators attempting to recover assets for their creditors, or who use stolen billions to lobby for policy changes.
An involuntary bankruptcy against Mexico’s TV Azteca has been dismissed, with a bankruptcy-court judge saying that the multimedia conglomerate and its bondholders are involved in a dispute that must play out in U.S. district court, WSJ Pro Bankruptcy reported. TV Azteca had been sued over missed payments to bondholders in a case in district court, and then earlier this year an involuntary bankruptcy petition was filed by a group of bondholders in bankruptcy court. Arguing for dismissal of the bankruptcy petition in August, TV Azteca said the sides are in a bona fide dispute, making the involuntary filing improper. It also said the involuntary petition was filed as a tactical maneuver related to a matter pending in another court, and that the U.S. involuntary bankruptcy would hurt the company. To the extent that an in-court reorganization should occur, it should happen in Mexico, TV Azteca said. In Monday’s ruling, Judge Lisa Beckerman said that TV Azteca’s motion to dismiss points to “the district court action as the evidence that the petitioning creditors’ claims are subject to a bona fide dispute.” “The parties specifically agreed in the indenture to submit to the exclusive jurisdiction of the state and federal courts located in the Borough of Manhattan with respect to any disputes regarding the notes and the indenture,” the ruling said. The fight stems from $400 million in unsecured bonds that TV Azteca issued in 2017. Beginning in early 2021, it missed several interest payments, primarily blaming the impact of the COVID-19 pandemic. Last year, certain investors including Contrarian Capital, Invesco and the State Teachers Retirement System of Ohio said the bonds were in default and demanded that interest and principal on the 2024 notes be paid in full.
Airline SAS AB received approval from a bankruptcy court in New York for a $1.2 billion rescue package that will see Air France-KLM and private equity firm Castlelake LP become owners in the Scandinavian flag-carrier, Bloomberg News reported. The company filed for chapter 11 bankruptcy protection in July 2022, saying it faced a significant decline in passenger demand during the COVID-19 pandemic as well as a series of pilot strikes and intense competition from low cost air carriers. The agreement will further consolidate Europe’s aviation industry with Air France-KLM having the option to take a controlling interest after two years under certain conditions. The new shareholder group, which also includes the Danish state and Lind Invest ApS, can now provide the ailing airline with $475 million in new equity and $725 million in secured convertible debt. Castlelake is also lending money to SAS to refinance the $500 million outstanding on a chapter 11 loan provided by Apollo Global Management Inc., which lost out to the Air France-KLM consortium, according to a statement late on Tuesday.
