The Miami-based parent company of charter airline iAero Airways and aviation maintenance firm iAeroTech, which combined employ 860 workers, is slated for bankruptcy auction, the South Florida Business Journal reported. iAeroAirways lists its headquarters as being located in Miami with its operational headquarters at Piedmond Triad International Airport in Greensboro, where it is believed to employ fewer than 100. The company was founded in 1997 as Swift Air, which iAero Group acquired and rebranded as iAero Airways in 2019. It operates a fleet of 42 aircraft. U.S. Bankruptcy Judge Robert A. Mark approved the auction and bidding procedures for AeroTech Miami on Oct. 17. The bid deadline is Dec. 1, the auction takes place Dec. 6 and a court hearing to confirm the auction result is scheduled for Dec. 13 in Miami. The minimum purchase price is $216.3 million, which represents the value of AeroTech’s secured loans with Synovus and BXC Bridge, an affiliate of Blackstone. Under the judge’s order, BXC Bridge is allowed to submit a credit bid, but it must include enough cash to repay the Synovus loans.
A collection of bondholders and insurers of Puerto Rico Electric Power Authority (Prepa) debt are banding together in their opposition to the bankrupt utility’s proposal to slash its debt by 75%, Bloomberg News reported. GoldenTree Asset Management, Syncora Guarantee, Assured Guaranty and certain members of an ad hoc group of the power utility’s bondholders — which includes Invesco Advisers — entered a cooperation agreement where they pledge to work together against the agency’s potential debt-cutting plan, according to a court document. The amount of creditor opposition to Prepa’s restructuring plan is greater than those supporting it. GoldenTree and the other parties in the new agreement hold or insure more than 49%, or about $4 billion, of the utility’s roughly $8.3 billion of outstanding debt. That’s more than the $2.4 billion held by a investor group led by BlackRock Financial Management that has signed on to the debt-cutting proposal. The agreement between GoldenTree and others directs the firms to “cooperate and coordinate activities in good faith (to the extent practicable and subject to the terms hereof) with the other parties to support the parties’ efforts in connection with any potential transaction and opposition to the plan,” according to the court document filed Tuesday. The Prepa ad hoc group holds a combined $2.3 billion of Prepa debt, as of Oct. 1, and along with Invesco includes MacKay Shields, Goldman Sachs Asset Management and Alliance Bernstein, among other firms, according to a court document. The pact aims to prevent bondholders or insurers from striking their own deals with Prepa and Puerto Rico’s financial oversight board, which is managing the island’s bankruptcy cases. GoldenTree and others claim that the BlackRock group forged their own debt-cutting plan with the oversight board and excluded other creditors.
FTX founder Sam Bankman-Fried previewed a potential defense Thursday when he told a federal judge that he relied on the blessing of lawyers to make business decisions such as deleting communications and making loans to himself, actions that prosecutors said allowed him to commit the crimes that led to the implosion of his crypto exchange, the Wall Street Journal reported. Bankman-Fried, on trial for fraud, money laundering and other offenses, had been expected to testify in front of a Manhattan federal jury on Thursday afternoon. Instead, in what amounted to an unusual practice session after the jury was dismissed for the day, U.S. District Judge Lewis Kaplan required the FTX founder to walk through several subjects that were in dispute so the judge could rule on what Bankman-Fried could say to jurors. Wearing an oversize gray suit and purple tie, Bankman-Fried began steadily and confidently, walking through business decisions that he said were guided by legal advice. But the rehearsal quickly turned when the prosecution came out swinging. Under cross examination, Bankman-Fried testified that he couldn’t recall specific conversations with the lawyers who he earlier said had overseen bank accounts, loans and communication policies. He at times was evasive and stumbled while saying he didn’t remember key details of the alleged conduct in question. Assistant U.S. Attorney Danielle Sassoon pressed Bankman-Fried on whether he had proof of the involvement of certain lawyers. “Do you have any paper records of these consultations?” she asked. Bankman-Fried said he had requested such records but didn’t have them. Under other questioning, he said he had little knowledge of some inner workings of the company he created.
Verde Building Solutions Inc. filed for chapter 11 protection on Oct. 11, according to records from the U.S. Bankruptcy Court for the Western District of North Carolina, the Charlotte Business Journal. In the filing, the company's assets were estimated to be between $500,001 and $1 million. Its liabilities, or potential financial obligation or debt owed in the future, were listed between $1 million and $10 million. The company's secured and unsecured debt is less than $7.5 million, not including debts owed to insiders or affiliates, the filing shows. That allowed Verde to file for bankruptcy under subchapter five, which doesn't require it to receive creditors' approval for its repayment plan. The company was founded in 2013, according to state business corporation records. Verde president Ron Staley is also behind Verde Homes. That company, founded in 2014, builds semi-custom, economically friendly homes and also does residential construction complex remodels and additions. Its portfolio includes six townhome/residential communities in Charlotte and one in Raleigh. In May 2019, Verde Homes received pushback from residents on a plan to develop a dozen age-restricted homes on Sardis Road, between Oak Creek and Creek Valley drives. Staley said at the time that the project would allow older residents to age in place. But community members argued it didn't align with approved plans and policies for that area or the city. The petition was eventually withdrawn. Verde Building Solutions will remain in possession of its properties and the management of its business during the bankruptcy proceedings, according to the filing.
FTX founder Sam Bankman-Fried has decided to testify in his own defense, a legal gamble that sets up a dramatic conclusion to his criminal trial in New York City, YahooFinance.com reported. The 31-year-old, who pleaded not guilty to seven counts of fraud and money laundering, has sat silently at his Manhattan trial for the last three weeks while prosecutors outlined their version of what happened to $8 billion in missing FTX customer deposits. He could take the stand as early as today, when the trial is scheduled to resume. His attorneys reportedly told U.S. District Judge Lewis Kaplan on Wednesday that Bankman-Fried would testify. Once Bankman-Fried takes the witness stand he opens himself up to significant risk because he can be cross-examined "extensively," said Northwestern University criminal law professor Juliet Sorensen. The government, which is expected to rest its case as soon as Thursday, alleges that FTX customers couldn't withdraw their money during the exchange's final days in November 2022 because Bankman-Fried had allowed his crypto trading fund, Alameda Research, to spend it. That claim was backed up by testimony from friends and former classmates Bankman-Fried hired for top jobs at FTX and Alameda. Some of those executives pleaded guilty to multiple felonies and agreed to testify against him. Read more.
In related news, Prices for FTX Group claims shot higher after an adviser to the failed crypto conglomerate said it is considering proposals from three bidders for its currently shuttered exchange, Bloomberg News reported. Cherokee Acquisition, which brokers bankruptcy claims, is now quoting larger FTX claims between 50 and 53 cents on the dollar, according to founder Vladimir Jelisavcic. Prices were in the low-to-mid 40 cents range last week. FTX claim prices have been rising relatively steadily in the year since the crypto empire collapsed into bankruptcy and advisers began recovering billions of dollars in assets. Major hedge funds have also been buying and selling the claims, which range from the rights to FTX accounts to the damages owed as a result of an abandoned contract. On Tuesday, FTX investment banker Kevin M. Cofsky said in court that the company is engaging with “multiple parties every day.” Options under consideration include selling the entire exchange, bringing in a partner to help restart the exchange or rebooting it by itself. Read more.
Crypto lender Genesis Global is pursuing a chapter 11 liquidation plan that abandons a previous settlement proposal to restructure the $1.7 billion in loans it extended to its parent company Digital Currency Group, WSJ Pro Bankruptcy reported. Genesis filed court papers Wednesday for a plan to exit from chapter 11 without a resolution of its claims against DCG, the crypto conglomerate founded by finance veteran Barry Silbert. Genesis is now preparing to liquidate its assets without the settlement proposal reached in August that intended to deliver estimated recoveries of between 70% to 90% for Genesis customers, including users of crypto exchange Gemini Trust’s Earn program. The settlement proposal didn’t get the support of key stakeholders, notably Gemini and its founders, the Winklevoss brothers, and the parties had been in continuing negotiations. Ultimately, Genesis was unable to reach an agreement with DCG on final debt terms, Genesis said in filings with the U.S. Bankruptcy Court in New York. And last week, New York Attorney General Letitia James filed a lawsuit against Gemini Trust, Genesis and DCG for allegedly defrauding more than 230,000 investors of more than $1 billion. In light of the lawsuit, Genesis and the official committee representing its customers determined that a settlement with DCG isn’t a viable route, Genesis said in the filings.
Shareholders of Western Global Airlines (WGA) have requested the U.S. Bankruptcy Court in Delaware to dismiss or reduce to zero, claims arising from a class action suit claiming prohibited financial transactions relating to the company's employee stock ownership plan (ESOP), CH-Aviation.com reported. The U.S. Department of Labor (DOL) is also investigating the circumstances of the ESOP transactions. The Neff family shareholders are seeking a court order subordinating the ESOP claims to those of general unsecured creditors to be reduced to zero or disallowed entirely. On October 17, WGA and its debtor subsidiaries in chapter 11 protection filed their objection to the class action, arguing the ESOP claims be disallowed for purposes of voting on the airline's restructuring plan. A court hearing has been scheduled for November 13 before Judge Karen B. Owens, but the court may grant the order without further notice or hearing if no responses to the shareholders' objection are filed.
Mutual funds that purchased $280 million of municipal debt to finance a 320-acre youth-sports complex near Phoenix would be virtually wiped out under a preliminary deal struck in the bankruptcy case, Bloomberg News reported. Miami-based Burke Operating Partners agreed in principal to purchase Legacy Park for $25.5 million, with most of the proceeds going to building contractors for unpaid work. Bondholders would receive $2.2 million in cash and 11% of preferred equity in a new company that would own the facility according to an agreement outlined in a bankruptcy court hearing late Tuesday. It would need to be approved in the bankruptcy process to take effect. Legacy Park has enough cash to remain open while the parties work to close the deal by the end of the November, said Keith Bierman, the complex’s chief restructuring officer. Legacy Cares filed for bankruptcy in May, saying construction setbacks, labor shortages and supply-chain delays amid the pandemic led to the park’s delayed opening and resulted in lost revenue. Mutual funds including the Vanguard Group and AllianceBernstein Holdings LP hold the $280 million of Legacy Cares bonds issued by an Arizona agency. The bonds last traded on Aug. 23 for 10 cents on the dollar. In addition to labor shortages, Legacy Park was also plagued by poor execution of restaurant and concession operations. In all, Legacy Park brought in just $27.7 million in 2022, far short of its nearly $100 million projection. It was losing more than $1 million a month on operations alone.
The Buffalo (N.Y.) Diocese is offering up to $100 million to settle child sex abuse claims in its federal bankruptcy case, the Buffalo News reported. As much as half of that would come from parishes, schools and other Catholic entities, while the diocese would also need to sell its Catholic Center on Main Street, the former Christ the King Seminary campus in the Town of Aurora and other properties. Those details were revealed in court papers filed late Monday in which diocese lawyers sought a preliminary injunction to keep all sex abuse lawsuits against parishes and schools grounded while mediated negotiations in the diocese bankruptcy case continue. Court papers said that the $100 million does not include insurance funds, while suggesting that insurance companies additionally could contribute “perhaps even hundreds of millions of dollars” to a settlement. Ilan D. Scharf, lead attorney for the unsecured creditors' committee that represents about 850 abuse claimants in the Buffalo Diocese bankruptcy case, declined to comment Tuesday on the numbers unveiled by the diocese lawyers. But some plaintiffs' lawyers on Tuesday accused the diocese of trying to "silence survivors" in its motion to halt the lawsuits. The Buffalo Diocese settlement offer appears to be very similar to the pending chapter 11 reorganization plan the Syracuse Diocese announced in July. Syracuse Bishop Douglas J. Lucia at the time said that the diocese had reached a deal with its creditors committee in which it would pay $50 million to a settlement trust, while its parishes would contribute $45 million, and $5 million would come from other Catholic entities. The full plan could be filed in court as early as next month.
BlockFi emerged from bankruptcy on Tuesday, nearly 11 months after it was swept away by the turbulence in the cryptocurrency industry following the collapse of FTX, Reuters reported. In its bankruptcy filing in November last year, BlockFi had cited its loans to FTX's sister firm Alameda as one of the reasons for the crisis it was facing. On Tuesday, the company said that it would officially begin enacting the actions detailed in its bankruptcy plan, like recovering assets it believes are owed to it by FTX, Three Arrows Capital and others. Any attempts to recover assets from those companies, however, will likely be contentious as both are themselves waddling through their respective bankruptcy processes. Separately, FTX co-founder Sam Bankman-Fried is undergoing a trial for fraud. BlockFi said that withdrawals are currently available to nearly all of its Wallet customers. Those with BlockFi Interest Accounts and Retail Loans will be repaid over the coming months, but the amounts they receive could vary based on the outcome of the FTX bankruptcy, BlockFi said.
