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Bankrupt crypto lender Voyager Digital Ltd. agreed to consider higher offers than the $1.4 billion bid it accepted from FTX US, the digital-asset exchange founded by billionaire Sam Bankman-Fried, a decision that could increase payouts to customers who had their accounts frozen, Bloomberg News reported. Under an arrangement approved by Bankruptcy Judge Michael E. Wiles on Wednesday, the company can cancel its deal with FTX should it get a higher offer. The sale can’t close until Judge Wiles approves Voyager’s bankruptcy payout plan, which the Manhattan-based judge may consider in December. FTX won a two-week-long auction for Voyager under a deal tied to court approval of the creditor payment plan, lawyers said during a court hearing held by telephone. Wiles pressed Voyager to include a standard bankruptcy clause called a “fiduciary out,” which allows a company under court protection to consider higher offers until a sale is final. FTX is currently “the only viable alternative” for the company, Voyager bankruptcy attorney Christine Okike told Wiles. The company agreed to change how the fiduciary out is worded to ensure that a better offer can be considered. One losing bidder, crytpo exchange CrossTower, will continue to press its offer, which it believes is better than FTX’s bid, CrossTower’s lawyer John Ashmead told Wiles during the hearing. 

The Justice Department’s bankruptcy watchdog wants Kirkland & Ellis LLP removed as counsel to 3M Co.’s bankrupt earplug manufacturing unit, saying the law firm has a conflict because it also is defending the parent company in mass earplug lawsuits, WSJ Pro Bankruptcy reported. Kirkland & Ellis doesn’t possess “undivided loyalty” to its client, 3M subsidiary Aearo Technologies LLC, according to court papers filed by the Office of the U.S. Trustee on Thursday objecting to the firm’s retention. The U.S. Trustee said that Kirkland can’t be loyal to Aearo because its bankruptcy process is being financed by 3M, which the firm also represents in roughly 230,000 personal-injury lawsuits pending against the company in federal court in Pensacola, Fla. 3M placed Aearo under chapter 11 protection in July in the U.S. Bankruptcy Court in Indianapolis, hoping to move the earplug lawsuits against the subsidiary and its solvent parent out of the tort system. Aearo’s chief restructuring officer said in court papers in August that Kirkland is well qualified and uniquely able to represent Aearo in chapter 11 because of its familiarity with the company’s business and potential legal issues that might arise in bankruptcy. The bankruptcy depends on 3M’s commitment to provide unlimited funding toward resolving the earplug litigation in return for a full release from liability. As counsel to Aearo, Kirkland has a fiduciary duty to maximize 3M’s contribution — and by implication to maximize 3M’s share of their combined tort liability, the U.S. Trustee said yesterday.

Six months after Edgemere, one of Dallas’s premier luxury retirement communities, went into bankruptcy, its plan for a turnaround has failed to satisfy the judge and other parties involved in the case, the Dallas Morning News reported. Edgemere, home to nearly 400 seniors, wanted until early next year to exclusively submit a recovery plan before U.S. Bankruptcy Judge Michelle Larson considers alternatives from its bondholders, landlord and former residents and their families. With occupancy hovering at 65% and entrance fees that can run upwards of $1 million, Edgemere has attracted only one new resident since filing for bankruptcy in April, according to court documents. Nationally, senior housing has seen a resurgence, with average occupancy over 82% as the COVID-19 pandemic wanes, according to the National Investment Center for Senior Housing and Care. In addition, Edgemere’s $10 million emergency loan, floated by bondholders so it could continue operating, is set to come due Dec. 31. The 1.55-million-square-foot facility operates as a continuing-care center, meaning it allows seniors to age into different levels of care without moving. “As of today, the debtors have no reasonable prospects of a viable plan,” Judge Larson told the parties in a Sept. 29 hearing. “Progress has not been made in negotiations with creditors as it pertains to the plan process. If anything, it has gotten worse.” Next week, if Edgemere hasn’t come up with a new plan that satisfies the parties, the judge will let UMB Bank, the trustee representing Edgemere’s bondholders, submit its own. “Of great importance to this court is that the trustee itself has seemingly lost faith to move these cases forward,” Judge Larson said. Read more.

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Elevated Construction and Remodeling LLC has elected to file under subchapter V of chapter 11 in the U.S. Bankruptcy Court for the Southern District of Indiana, Louisville Business First reported. Elevated Construction and Remodeling is a Sellersburg, Ind.-based business that was founded about 25 years ago. It services Jefferson, Oldham and Bullitt counties in Kentucky, and Clark, Floyd, Scott and Harrison counties in Indiana. It offers roofing, deck, remodeling and additions services. William Harbison, a member of Seiller Waterman LLC, is representing Elevated Construction in its bankruptcy case. “This small-business case is a perfect example of why Congress chose to streamline the Chapter 11 bankruptcy process to make it a more affordable and realistic option for businesses that deserve to be saved, but would have been priced out of a traditional chapter 11 process,” Harbison wrote in a statement to Business First. “Elevated experienced many of the problems that small businesses faced during the pandemic, including the loss of key contributors to illness for extended periods. But Elevated can be profitable again and can continue to contribute to the local community and economy. Elevated will use the tools that Chapter 11 offers to reorganize its debt in a way that is transparent and fair to all of its stakeholders, including its vendors and customers, and it looks forward to serving Southern Indiana for years to come." The company has less than $50,000 in assets, according to the bankruptcy filing. Its estimated liabilities total between $100,001 and $500,000.

Revlon Inc. shares will be delisted from the New York Stock Exchange after a surge of market interest in the beauty-products supplier following its chapter 11 filing in June, WSJ Pro Bankruptcy reported. Shares fell 5% on yesterday to close at $3.90 before the NYSE said that it had denied Revlon’s appeal to stay listed on the Big Board. The stock is now expected to continue trading over the counter, according to the company, and was trading at around $2 when it filed for bankruptcy but soared more than 400% the following week. It has since closed at prices approaching $9. Revlon, 85% owned by billionaire Ronald Perelman, filed for bankruptcy after struggling with a heavy debt load, tough competition and an acute cash crunch. The NYSE had said in June that it would begin delisting proceedings, which is common when companies file for bankruptcy. Revlon said last week it had appealed the delisting decision “to protect shareholders.” Minority owners of Revlon asked in bankruptcy court in July to form an official committee to represent the interests of equityholders as the company restructures. They pointed to the surging stock price, fueled by a burst of interest from individual investors, as evidence its shares have value. A bankruptcy judge rejected that request, saying that stockholders’ interests were already represented in the bankruptcy case.

Bankrupt crypto lender Voyager Digital received initial court approval yesterday for a $1.42 billion sale of its assets to exchange platform FTX, allowing Voyager to solicit creditor votes on the proposal, Reuters reported. Bankruptcy Judge Michael Wiles in Manhattan said during a court hearing that he would approve Voyager's sale contract and creditor solicitation materials once Voyager makes certain changes clarifying that the company remains open to higher and better offers than the FTX bid. Wiles said that the sale would not become final until it is approved by creditors as part of a chapter 11 bankruptcy plan. "If the plan falls apart, there's no part of this agreement that survives," Judge Wiles said. FTX made the winning bid after a two-week auction held in September. The sale, if approved by creditors, would move most Voyager customers to accounts on FTX's platform. They would recover 72% of the cryptocurrency assets that they held with Voyager before its bankruptcy filing, although the value of those cryptocurrency assets may have diminished in the time since Voyager filed for chapter 11.

Electric-vehicle startup Mullen Automotive Inc’s shares climbed after the company said it gained court approval to buy an Indiana manufacturing plant and other assets from now-defunct Electric Last Mile Solutions Inc. for $92 million, WSJ Pro Bankruptcy reported. Mullen’s shares, down about 93% so far this year, rose 64% in Wednesday trading to 36 cents. Electric Last Mile put its assets up for sale after shutting its business and filing a bankruptcy liquidation case in June. The $92 million deal price includes Electric Last Mile Solutions’ manufacturing plant in Mishawaka, Ind., and its inventory and intellectual property. Mullen is paying $55 million in cash and assuming roughly $37 million in contractual liabilities, court records and securities filings show. Electric Last Mile listed debt obligations of between $50 million and $100 million in its chapter 7 petition, although that didn’t account for the cost of winding down the company’s business and administering claims against the bankruptcy estate. Mullen said that it expects to pay all cash under the deal, which Chief Executive David Michery said would shorten the company’s path to production.

Crypto lender Voyager Digital has agreed to settle claims against company executives who approved a risky nearly $1 billion loan to failed crypto hedge fund Three Arrows Capital (3AC) after minimal due diligence, a misstep that contributed to Voyager's own bankruptcy, Reuters reported. Voyager said in a Monday court filing that pursuing litigation against chief executive officer Stephen Ehrlich and another executive would not be cost-effective. Instead, Ehrlich will pay $1.125 million in cash to Voyager, and the company will pursue recoveries from director and officers insurance policies worth up to $20 million, according to the filing. Voyager filed for bankruptcy protection in July, citing 3AC's June 2022 default on the loan as a major factor in its insolvency. 3AC began liquidation proceedings in the British Virgin Islands in late June. Voyager had lost significant value during an industry-wide cryptocurrency slump caused by the collapse of the Terra Luna stablecoin in May 2022 and stopped customers from withdrawing their crypto assets shortly before its bankruptcy filing.

An insurer on Monday lost its fight to dismiss the bankruptcy of Imerys Talc America Inc., which sought protection from creditors three years ago, the Wall Street Journal reported. The Manchester, N.H.-based RiverStone insurers said Imerys sold all of its mining operations in early 2021, leaving the company with virtually no business. The insurance company said Imerys has no valid reorganization prospects and that its bankruptcy should be thrown out for bad faith. Imerys filed for bankruptcy in 2019 over more than 14,000 personal-injury claims mostly related to talc it mined that supplied Johnson & Johnson’s baby-powder products, which allegedly cause cancer. Judge Laurie Selber Silverstein in the U.S. Bankruptcy Court of Wilmington, Del., denied the insurer’s request to dismiss the bankruptcy on Monday. The judge said the insurer failed to show that it is in any immediate harm since Imerys doesn’t currently have a bankruptcy plan before the court. The judge said that RiverStone isn’t currently a creditor, but she left it open for the insurer to raise any harm from a future plan. Last year, Judge Silverstein ruled to disqualify decisive ballots cast in favor of a cancer-victim compensation plan, saying that most of the asbestos-injury clients represented by one law firm had no basis to vote.

U.S. prosecutors and several federal regulators are seeking information from bankrupt crypto lender Celsius Network Ltd., Bloomberg News reported. The inquiries, which were disclosed in court filings this month, provide a glimpse into the legal headaches that Celsius faces as it seeks to restructure. The company froze customer withdrawals in June in a bid to evade a panic run by users, then filed for bankruptcy in July. Celsius has been one of the more high-profile casualties of a steep selloff in digital assets that was fueled in part by May’s collapse of the Terra blockchain. Since declaring insolvency, Celsius has faced criticism from users over its marketing and management and is exploring a sale of some or all of its assets. The firm, which rocketed in popularity for paying people interest on virtual token deposits, received a federal grand jury subpoena on June 15, according to a document filed last week by lawyers for Celsius in federal bankruptcy court in Manhattan. The subpoena came from the U.S. District Court for the Southern District of New York. The company also received inquiries from the Commodity Futures Trading Commission, Securities and Exchange Commission, and Federal Trade Commission, according to a separate filing from the lawyers. One CFTC inquiry focused on trading activities related to TerraUSD and its sister token, Luna. Another one, according to the document, was titled “In the Matter of Certain Pending Persons Engaged In Fraud And Other Unlawful Conduct With Respect to Digital Asset Transactions,” the filing said.