%1

After a federal law to curb surprise medical bills in the U.S. triggered a handful of the year’s biggest bankruptcies, investors are eyeing corporate-debt piles for potential pain ahead, Bloomberg News reported. KKR & Co.-backed ambulance company Global Medical Response is in talks to push out some $4 billion of maturing debt in 2025, Bloomberg reported last month. Blackstone Inc.-backed staffing firm TeamHealth Inc., meanwhile, could face as much as $2.5 billion of debt due next year, and Radiology Partners Inc. has roughly $2 billion due over the next two years. Those are hefty sums given investors’ concern that revenues may take a hit from the rollout of the No Surprises Act — a law that last year banned companies from unexpectedly billing insured patients for care from out-of-network providers at in-network facilities. Credit-rating assessors have been warning about a drag from the new rules, which stand to magnify other risks, like elevated interest rates and labor costs. TeamHealth, for one, was cut deeper into junk territory earlier this month by S&P Global Ratings as its upcoming maturities spotlight uncertainty. “The No Surprises Act certainly puts pressure on health-care companies that have that exposure,” said Clare Moylan, a co-founder of Gibbins Advisors, which consults health-care firms. “If you’re tight on margin already, and you lose that margin, then you have to find it elsewhere.” Read more.

Moylan will be the moderator of a special abiLIVE webinar on Dec. 11 titled "Predicting Distress and Opportunities in the Health Care Sector." Click here to register for free!

Collapsed cryptocurrency exchange FTX, the biggest casualty of the “crypto winter” last year, just hit the first anniversary of its bankruptcy filing. Crypto lender Celsius Network, which collapsed in the summer of 2022, was cleared to exit bankruptcy last week. Their failures, along with those of crypto industry players like Voyager Digital and BlockFi, have tested a bankruptcy system with little experience with a decentralized and volatile sector with difficult to trace and value assets, WSJ Pro Bankruptcy reported. Many factors have led crypto bankruptcies like FTX’s to drag on as so-called free fall cases, or when companies file for bankruptcy protection without restructuring agreements with creditors in place. “The sheer fact that we are talking about this case a year later is different from what we’ve been seeing in the bankruptcy landscape,” said Timothy Graulich, head of international restructuring at Davis Polk & Wardwell. The law firm represents several large customers in FTX’s bankruptcy. Businesses often seek chapter 11 protection with prepackaged restructuring agreements and hope to reorganize quickly, so “It is really only free fall cases that last this long,” said Graulich.

A real estate investor facing scrutiny from lenders and investors is now the subject of a government inquiry into an offer to buy shares in WeWork Inc., Bloomberg News reported. The U.S. Securities and Exchange Commission has sent inquiries to Jonathan Larmore, the founder of Arciterra Cos., about a Nov. 3 press release in which an entity called Cole Capital Funds said it was seeking to buy shares in the coworking company at a significant premium, according to a person familiar with the matter who asked not to be named citing private information. The inquiry includes Larmore’s trading history in WeWork stock and options, the person said. A company filing links Larmore to Cole Capital Funds, which was registered in October with the Arizona Corporation Commission. The real estate investor was already facing an SEC inquiry about Arciterra, which had owned as many as 80 properties including strip malls. In an interview, Larmore said that he planned to make all of the required filings related to his purchase of WeWork shares and that he couldn’t comment further on the matter until he had done so. He declined to comment on the SEC inquiry, and said that he was working through lawsuits filed by private parties and was confident in their outcome. “Many of the lawsuits have been resolved and we will continue to resolve the rest,” he said.

FTX’s bankruptcy advisers sued crypto exchange Bybit Fintech Ltd and two corporate affiliates to recover cash and digital assets valued at roughly $953 million that was withdrawn from Sam Bankman-Fried’s crypto exchange before it filed chapter 11 a year ago, Bloomberg News reported. The lawsuit filed Friday in Delaware court alleges Bybit’s investment arm, Mirana Corp., had special “VIP” benefits, which most FTX customers didn’t have, and used those special privileges to get most of its assets off Bankman-Fried’s platform before it collapsed in November 2022. Mirana pressured FTX employees to fulfill its withdraw requests as regular customers of FTX.com waited hours trying to get money off the exchange as it collapsed, according to the complaint. The lawsuit seeks to recover assets worth roughly $953 million, a figure that includes more than $327 million Mirana allegedly withdrew from FTX between the early morning of Nov. 7 and Nov. 8 2022, when Bankman-Fried’s exchange paused withdraws. The bankruptcy lawsuit names Bybit Fintech Ltd., Mirana and an affiliated crypto trading firm named Time Research Ltd. The lawsuit also lists as defendants a senior Mirana executive at the time and Singaporean residents whom the complaint alleges either benefited or had a role in the FTX withdraws, which are subject to the bankruptcy suit.

A year after the bankruptcy of FTX, the cryptocurrency industry is irrevocably altered — while at the same time in many ways remarkably familiar, Bloomberg News reported. Mostly gone are the day traders and the abundant leverage that drove Bitcoin to its November 2021 high at close to $69,000. Same for celebrities and social-media influencers peddling nonfungible tokens and memecoins. Regulators determined not to get caught off guard again are tightening their grip. And large financial firms like BlackRock Inc. are moving in, drawn by the prospect of the U.S. Securities and Exchange Commission giving its first blessing for an ETF investing directly in Bitcoin. Perhaps the most tangible indicator that crypto has moved on: Bitcoin has recovered all its losses since the May 2022 implosion of stablecoin TerraUSD, which set in motion the wave of failures that ultimately helped bring down FTX. Some observers see an industry still afflicted by rampant speculation and insufficient safeguards. The Tether stablecoin, a pillar of the sector long dodged by speculation about the quality of assets backing it and allegations that it’s being used by criminals, has become more dominant in recent months. Binance, the biggest exchange, still operates without a formal headquarters.

A year after it shuttered operations at its 60,000-square-foot farming facility in Braddock, Pa., the vertical farming startup Fifth Season has filed for bankruptcy, the Pittsburgh Post-Gazette reported. Michael Von Lehman, president of Meridian Management Partners, had been trying to find a new buyer for the plant after he was brought on as chief restructuring officer in December. But the vertical farming industry is too fragile for any company to take on such a significant acquisition right now, he said. RDC, the owner and developer that poured $30 million into the autonomous farming facility, had planned to convert the space to food manufacturing in early July if a new operator wasn't found. The building was listed for sale for $12 million in June by the commercial real estate firm CBRE Inc. Fifth Season did not own most of the assets it operated, Mr. Von Lehman said. It leased the Braddock building and most of its equipment. According to a filing with the United States Bankruptcy Court for the Western District of Pennsylvania, the company estimated its asset value ranges between $50,001 and $100,000. Its liabilities are estimated to be between $10,000,001 and $50 million. 1

Global ratings agency Fitch said today that it plans to withdraw all the ratings on China's Country Garden Services Holding on or about Dec. 12 for commercial reasons, Reuters reported. "Fitch believes that Country Garden Services investors benefit from increased rating coverage by Fitch and is providing approximately 30 days' notice to the market of the rating withdrawal," the ratings agency said in a statement on Monday. Fitch had downgraded Country Garden Services to BB+ and placed its rating on negative watch last week. Chinese courts had ordered a freeze on 63.68 million yuan worth of shares in two units of Country Garden Service, a sister company of China's property giant Country Garden Holdings, the nation's biggest private property developer. Country Garden Holdings missed its coupon payment in October, triggering default terms. Reuters' had earlier reported citing sources that the company aims to have an offshore debt restructuring plan by year end.

Celsius Network, the crypto platform that touted itself as safer than a bank, won court approval to end its bankruptcy case and release most of its remaining cryptocurrency back to hundreds of thousands of customers whose funds have been trapped since last year, WSJ Pro Bankruptcy reported. The plan approved in a New York bankruptcy court Thursday also creates a new company built around Celsius’s crypto mining and staking activities, wrapping up a first-of-its-kind bankruptcy process that saw intense involvement from individual customers who fought to influence the outcome. Customers are expected to get back only a fraction of the cryptocurrency they deposited with Celsius before it froze user accounts last year with a $1.2 billion hole in its balance sheet, one of the biggest crypto collapses ever. Bankruptcy Judge Martin Glenn issued an opinion approving the plan proposed by Celsius and striking down the last remaining challenges to the terms of the reorganization plan. With the ruling, nearly all the major U.S. crypto firms that filed bankruptcy due to the market meltdown in 2022 have now concluded the court process and repaid what they could to their customers. The chapter 11 case of crypto exchange FTX is continuing.

A top financial regulator is crafting a plan to ensure that more derivatives exchanges keep client funds separate from their corporate cash, the latest response by U.S. policymakers to the havoc wrought by fallen crypto giant FTX, Bloomberg News reported. A draft proposal being worked on by the Commodity Futures Trading Commission would expand the scope of existing regulatory defenses to apply to exchanges that let customers trade without going through a brokerage. A version of those limits helped keep FTX from raiding customer funds at its LedgerX subsidiary, a former unit of Sam Bankman-Fried’s sprawling crypto universe that was overseen by the CFTC, according to one of the agency’s commissioners. The CFTC required the firm to separate customer and company assets as a condition for letting it offer crypto derivatives fully backed by collateral directly to customers. Kristin Johnson, a Democratic member of the CFTC, said rules requiring segregation of customers assets should apply to any firms using or seeking similar direct-to-customer models, whether they’re offering crypto products or other types of derivatives. That argument is bolstered by LedgerX’s insulation from the broader crumbling of the FTX empire and a desire to avoid such crises going forward. The CFTC should act immediately to put in place rules to prevent misuse or loss of customer funds, in light of events like FTX’s collapse, Johnson said. “This is especially critical when we are considering direct-to-retail market structures for complex financial products, like leveraged, crypto derivatives transactions, and particularly important when permitting untested liquidation and resolution approaches,” she said.

A company run by former New York Stock Exchange President Tom Farley is among three suitors vying to buy the remnants of FTX, as the auction for the collapsed cryptocurrency exchange founded by Sam Bankman-Fried reaches its final stages, the Wall Street Journal reported. Bullish, the crypto exchange run by Farley, fintech startup Figure Technologies and crypto venture-capital firm Proof Group are competing to buy FTX, according to people familiar with the matter. The winner could restart the exchange after its planned exit from bankruptcy next year. A banker advising FTX on the process said at a hearing last month that the company received interest from over 70 parties and narrowed it to three, without naming them. A winner could be picked in December. CoinDesk earlier reported on Proof’s bid; the other two haven’t been previously reported. There are no guarantees a deal will come together, and another suitor could yet emerge. As recently as last fall, FTX ranked as one of the world’s biggest crypto exchanges, handling billions of dollars in trading volumes for individual investors outside the U.S. and professional traders. Venture capitalists valued FTX at $32 billion in January 2022, making Bankman-Fried a billionaire several times over. It collapsed abruptly in November 2022 following a run on FTX customer funds. Prosecutors charged Bankman-Fried with fraud, accusing him of using a back door to plunder billions of dollars of customer funds and spend it on luxury real estate, personal investments and political donations. A New York federal jury last week convicted him on all seven counts he faced. He is expected to be sentenced in March and faces up to 110 years in prison.