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Bankrupt FTX Trading Ltd. is suing to recover $700 million that the failed crypto exchange paid venture capital firm K5 Global and its principals after they provided access to celebrities and politicians, Bloomberg News reported. K5 Global founder Michael Kives and managing member Bryan Baum allegedly profited by ingratiating themselves with former FTX Chief Executive Officer Sam Bankman-Fried, who transferred vast sums from FTX to K5 and related ventures without meaningful due diligence, according to FTX’s lawsuit, filed Thursday in Delaware bankruptcy court. Bankman-Fried “was captivated” by Kives after attending a February 2022 dinner party at his house alongside guests including former politicians and a “centibillionaire CEO.” Days later, Bankman-Fried attended a Super Bowl party that included well-known celebrities, the lawsuit said. In an internal note Bankman-Fried drafted shortly after the events, he said Kives and Baum were “something of a one-stop shop for relationships that we should utilize” and that in exchange, the pair wanted him and FTX to consider celebrity endorsements with their friends and “maybe us to invest in them or some stuff, idk.” Read more.

In related news, a group of media organizations on Friday appealed a court decision that allows collapsed crypto exchange FTX to keep customer names secret during its bankruptcy case, Reuters reported. U.S. Bankruptcy Judge John Dorsey in Wilmington, Delaware, ruled earlier this month that FTX did not have to reveal its customers' names because doing so could expose them to identity theft and other scams. Bankrupt companies are typically required to reveal the names of their creditors and the amounts of debt they hold, including those of individual customers, but U.S. bankruptcy law contains an exception for information that would create undue risk of identity theft or other injury. Bloomberg, Dow Jones & Company, the New York Times Company and the Financial Times appealed Dorsey's ruling. Their attorneys have argued that FTX is not entitled to a "novel and sweeping exception" to bankruptcy's typical disclosure requirements simply because its customers used cryptocurrency. Read more.

The U.S. Securities and Exchange Commission has agreed to postpone the payment of a $30-million fine from bankrupt crypto lender BlockFi until creditors are paid back. The amount represents the balance of a $50-million settlement with the regulator from February 2022, CoinTelegraph.com reported. According to June 22 court filings, the SEC will forgo the amount owed by BlockFi to “maximize” and avoid delays in funds’ distribution to investors “until payment in full of all other Allowed Claims.” The document stated, “The Commission has agreed to forego participating in any distributions under the Plan or requiring any cash reserve in connection with such distributions.” In February 2022, the SEC announced actions against the crypto lending company over its failure to register its high-yield interest accounts as securities. BlockFi agreed to pay $50 million to the regulator as part of the settlement and another $50 million to 32 U.S. states filing similar complaints. According to court documents, the SEC was at the top of BlockFi creditor’s list, along with West Realm Shires Services Inc. (doing business as FTX US). BlockFi filed for chapter 11 bankruptcy protection in late November after the FTX crisis raised questions about its financial health. According to its bankruptcy filing, BlockFi had $256.9 million in liquidity at that time.

Western Global Airlines LLC is weighing options including filing for bankruptcy as it faces dwindling liquidity, Bloomberg News reported. The cargo airline began confidential talks with some of its creditors related to its financing needs last month, Bloomberg previously reported. A final decision hasn’t been made, and the situation could change. A representative for Estero, Florida-based Western Global declined to comment. One of the smaller air cargo providers in the U.S., Western Global has been burning cash amid cooling demand. It’s been dealing with labor shortages that blocked the company from using certain routes to Asia, which led to soaring fuel costs, according to a March note from Moody’s Investors Service. The company had $400 million in aircraft assets and a fleet of 21 aircraft as of September, according to Moody’s. All of the airline’s assets, however, are encumbered, limiting its ability to raise new financing.

Vice Media is set to be acquired by a group of its lenders including Fortress Investment Group and Soros Fund Management, capping off a sale process for a once thriving digital-media company that failed in a difficult environment for publishers, WSJ Pro Bankruptcy reported. A group of Vice Media’s lenders led by Fortress and Soros offered $225 million to take over the company, which filed for bankruptcy last month. On Thursday, Vice filed a notice of an amended bid from the lender group that showed its takeover would value the company at $350 million. Brooklyn, N.Y.-based Vice was soliciting outside bids, but no offers that the company considered superior emerged, the company’s co-chief executives said. “While we received multiple bids for the company, none of the other bids rose to the level of being deemed a superior bid,” Bruce Dixon and Hozefa Lokhandwala, Vice’s co-CEOs, said Thursday. The winning bid needs to be approved by a bankruptcy court. Vice is scheduled to have a hearing in the U.S. Bankruptcy Court in New York today about its sale to Fortress and Soros.

Silicon Valley Bank customers whose deposits were seized by U.S. authorities after the lender’s collapse are fighting back, the Wall Street Journal reported. Customers who held money in the bank’s Cayman Islands branch found their accounts wiped down to zero after SVB collapsed in March, because a U.S. move to guarantee deposits didn’t apply to them. Their pain was compounded when they found out First Citizens BancShares had acquired their loans from SVB — meaning they had lost their money, but kept their debts. Several firms including venture-capital funds in Hong Kong and mainland China have pushed back, filing a petition in a Cayman Islands court last week to initiate a windup procedure of the former U.S. bank’s branch there. The depositors held around $38 million in their Caymans SVB accounts, according to the petition. The depositors hope the move will increase their chances of getting their money back from the Federal Deposit Insurance Corp., which seized their funds. The petition, filed by law firm Campbells to the Cayman court on June 13, argues that it is “just and equitable” for SVB’s Cayman Islands branch to be wound up, since the branch was unable to pay debt. The petition also asks the court to approve the appointment of official liquidators to help find ways to retrieve the funds. The liquidators will be able to investigate and keep depositors informed and to ensure they are treated fairly, said Paul Kennedy, a partner at Campbells.

A bankruptcy judge has ruled to allow a Berkshire Hathaway–affiliated defunct talcum powder supplier to remain in bankruptcy to address thousands of personal injury cases, rejecting a request from a state court-appointed receiver to throw the case out of chapter 11, WSJ Pro Bankruptcy reported. Judge Michael Kaplan of the U.S. Bankruptcy Court in New Jersey said in his ruling Tuesday that the board of directors of former talc supplier Whittaker, Clark & Daniels had the authority to place the company under chapter 11 protection in April. The judge declined to dismiss the case requested by the receiver appointed by a South Carolina trial judge in March. The receiver, Peter Protopapas, was appointed after Whittaker Clark was hit by a $29 million verdict and found to be on the verge of insolvency. He argued in bankruptcy court that the appointment of the receiver by the state court stripped the company board’s authority to file for bankruptcy. Judge Kaplan said in his ruling that he can’t give weight to that argument, which he said was based on the receiver’s “mistaken understanding” of the receivership order. “This court will not, and cannot, give force to any subjective belief that the receivership order achieved something beyond the powers outlined therein — especially when that expansive interpretation would contravene case law and the Bankruptcy Code,” Judge Kaplan wrote in Tuesday’s ruling.

Generic-drug maker Mallinckrodt yesterday said that it set aside more than $3.4 million in executive retention bonuses in the event of a possible filing for yet another bankruptcy. The move is latest sign of difficulty for the company, which has struggled to pay its bills in the wake of a $1.7 billion opioid settlement following allegations it helped propel the nation’s opioid crisis. The disclosure yesterday comes after the company last week said it reached an agreement to push back the due date of a $200 million payment from that settlement from June 16 to June 23. The company this month also opted not to make interest payments, and disclosed that some debt holders had proposed a second bankruptcy filing. Mallinckrodt emerged from chapter 11 last year.

As part of its bankruptcy proceedings, the Diocese of Norwich (Conn.) has sold 113.19 acres of property to the Mohegan Tribe, the Norwich Bulletin reported. The property includes the St. Bernard School and was approved by Judge James J. Tancredi of the U.S. Bankruptcy Court in Hartford. In addition to the $6,550,000 sale price, the bid terms include an initial 20-year lease of the property to St. Bernard School, which under the terms of the bid will remain open. The Court granted a waiver of the 14-day stay period under U.S. Bankruptcy Rules and the sale closed on June 21 following entry of the Sale Order.