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Distressed U.S. companies are increasingly resorting to debt restructurings to avoid expensive bankruptcy proceedings, but many borrowers ultimately end up in court anyway — with their deals amounting to little more than “can-kicking” exercises, the Financial Times reported. Almost three-quarters of U.S. corporate debt defaults last year were out-of-court “distressed exchanges,” where a company offers creditors assets worth less than their original bonds or loans, according to a report by Moody’s this month. That is up from roughly half in 2020, the rating agency said. Moody’s predicts that far-reaching private-equity ownership of companies with very weak ratings will further fuel the growth of distressed exchanges because this type of restructuring can protect such backers’ investments. However, many businesses default again following such restructurings. The “re-default” rate monitored by Moody’s currently stands at 47 percent. Some companies are “just kicking the can” with distressed exchanges and merely delaying an inevitable bankruptcy, said Sinjin Bowron, head of high-yield and leveraged loans at Beach Point Capital Management.

A defunct talc supplier owned by Berkshire Hathaway Inc. has filed for bankruptcy, adding to the pileup of cosmetic talc businesses entering chapter 11 to weather mass lawsuits alleging that once-popular consumer products exposed their users to asbestos, WSJ Pro Bankruptcy reported. Former talc supplier Whittaker, Clark & Daniels Inc. and several of its affiliates filed for protection in New Jersey Wednesday, citing liabilities to more than 1,000 personal-injury plaintiffs who allege that asbestos made its way into talc-containing cosmetic products such as Old Spice powder and Mary Kay cosmetics decades ago. Whittaker Clark filed chapter 11 despite the recent appointment of a receiver over its affairs after it was hit by a $29 million verdict in South Carolina in March and found by the trial judge to be in danger of insolvency. Whittaker Clark’s chief restructuring officer, Mohsin Meghji, said in court filings that the company “disputes the validity and enforceability of the receivership order.” His court filing said that Whittaker Clark filed chapter 11 because it lacks any alternative mechanism to efficiently and equitably address its asbestos liabilities. Berkshire Hathaway indirectly owns Whittaker Clark’s parent company, Soco West Inc., which also filed for chapter 11, court papers show. Berkshire Hathaway said Thursday that Whittaker Clark had ceased operations in 2004 and had sold off its operating assets, though it continued to defend against the tort and environmental claims it faced.

David’s Bridal LLC’s chief executive officer is betting the retailer’s reputation with brides will help it find a rescuer in bankruptcy, even in an era of backyard weddings and scaled-down events, Bloomberg News reported. David’s CEO Jim Marcum said in an interview that the company held discussions with private-equity firms and potential strategic buyers since the retailer filed chapter 11 and that he’s optimistic they’ll complete a sale to keep many of its nearly 300 locations open. Company advisers are fielding potential bids through the end of May, he said. “We have quite a few NDAs signed; we’ve got people doing a lot of work,” Marcum said. “It’s pretty active.” Facing a severe cash crunch, David’s was forced to file bankruptcy this month without a deal to sell the business in hand. The filing marks David’s second trip to bankruptcy court after it emerged in January 2019 from an earlier chapter 11 with a plan that slashed about $450 million in debt from its balance sheet. Marcum joined David’s in 2019 from Apollo Global Management and later oversaw an out-of-court restructuring that swapped another $276 million of term loan debt for equity in the business and injected $55 million in capital. Soon after, COVID-19 forced David’s to temporarily shut its stores and set off a major upheaval in the wedding industry, which still hasn’t fully recovered.

SVB Financial Group, the former parent company of failed Silicon Valley Bank, is burning through cash while it struggles to gain access to records it says are necessary to move forward in bankruptcy, Bloomberg News reported. The firm is sparring with the Federal Deposit Insurance Corp. over access to those records — things like minutes from board meetings — as well as $2 billion the agency seized after the bank failed in March. “There’s a category of material that the FDIC claims to have some rights over which the debtor also believes is its property,” Jim Bromley, an attorney representing SVB Financial, said during a bankruptcy hearing on Wednesday. First Citizens Bank’s purchase of SVB’s banking operations last month has complicated negotiations, he said. Bankruptcy Judge Martin Glenn expressed repeated concern over the slow pace of the case, especially given the company’s limited cash. “This process has got to move along,” Glenn said in the hearing Wednesday. “It was clear from the first-day hearing that liquidity is limited and it needs to move forward rapidly.” SVB Financial is negotiating with both the FDIC and First Citizens in order to obtain the records at issue and is close to signing a nondisclosure agreement that will aid the exchange, Bromley said.

U.S. bank regulators are weighing the prospect of downgrading their private assessments of First Republic Bank — a move that may curb the troubled firm’s access to Federal Reserve lending facilities, Bloomberg News reported. The Federal Deposit Insurance Corp. has been giving the bank time to reach a private deal to shore up its finances. But as weeks keep passing without a transaction, senior officials are increasingly weighing whether to downgrade their scoring of the firm’s condition, including its so-called Camels rating, according to people with direct knowledge of the talks. That would likely limit the bank’s use of the Fed’s discount window and an emergency facility launched last month. The FDIC hasn’t reached a decision, nor have officials warned First Republic about their thinking while waiting on the bank’s managers to shore up its balance sheet, some of the people said, asking not to be identified discussing the private conversations. If the firm is able to reach a deal with new backers to strengthen its finances, that could head off the need to lower ratings.

Celsius Network LLC creditors want a bankruptcy judge to help them unmask FTX users they allege were involved in suspicious cryptocurrency trades that may have manipulated the price of Celsius’s native token last year, Bloomberg News reported. A committee representing Celsius creditors on Wednesday asked a bankruptcy judge for permission to subpoena FTX for information to identify users behind 10 cryptocurrency wallets they say engaged in a pattern of suspicious trades of Celsius’s so-called CEL coin between April and August. Celsius creditors said they need the FTX user information to determine whether the trading was legitimate “or instead a form of market manipulation, such as wash trading,” according to court papers filed yesterday. The committee said it retained blockchain consultant Elementus Inc., which identified 947 transactions over a three-day period “involving a near one-to-one relationship” between CEL token deposits and withdrawals among the 10 private crypto wallets and wallets on the FTX exchange. The CEL trades in question occurred between the date Celsius paused customer withdrawals on June 12 and the company’s chapter 11 filing on July 13, when the price of the token was 81 cents, according to court documents.

Cincinnati developer Ray Schneider has filed bankruptcy, and one of the creditors Schneider is engaged in other litigation with is asking for a court-appointed trustee on the matter, the Cincinnati Business Courier reported. Schneider, the president of Circle Development, filed for chapter 11 bankruptcy on March 2 in the U.S. Bankruptcy Court for the Southern District of Ohio, claiming between $10 million and $50 million in assets in a court filing. He also claimed between $100 million and $500 million in liabilities. In a court document listing the 20 largest claims and creditors that Schneider owes, claims totaled more than $177 million, with an additional unsecured claim of over $7.2 million. Circle Development is the eighth-largest commercial real estate development group in Greater Cincinnati, according to Business Courier research. It had 1.36 million square feet of locally owned and developed property in its portfolio in 2022.

Binance.US terminated an agreement to purchase the bankrupt crypto broker Voyager Digital Holdings Ltd., less than a week after federal regulators dropped their efforts to halt the deal in court, Bloomberg News reported. The decision came after months of wrangling and the intervention of multiple federal and state regulators over the deal. In a statement, Binance.US said “the hostile and uncertain regulatory climate in the United States has introduced an unpredictable operating environment impacting the entire American business community.” “While this development is disappointing, our chapter 11 plan allows for direct distribution of cash and crypto to customers via the Voyager platform,” the company said on Twitter. “Consistent with the plan, we will now move swiftly to return value to customers via direct distributions. We will provide more information on next steps and any actions customers need to take in the coming days.” It is the second failed deal for Voyager, which has been trying to exit bankruptcy and repay its customers since filing for chapter 11 protection last year. Voyager was among the first examples of crypto platforms that Sam Bankman-Fried tried to bail out, which at the time earned him a reputation as an industry savior. In September, FTX US won an auction for Voyager assets in an agreement valued at about $1.4 billion. Mere months later, with FTX International facing bankruptcy of its own and Bankman-Fried under arrest on criminal charges, that deal collapsed. In December, Binance.US entered the fray with a proposal worth around $1 billion at the time and that would have brought in about $20 million in cash for creditors of the failed firm.

Bankrupt crypto exchange FTX has agreed to sell U.S. derivatives exchange LedgerX for $50 million, a fraction of its purchase price when FTX bought it, WSJ Pro Bankruptcy reported. If the court overseeing FTX’s bankruptcy approves the sale, it would mark a nearly $250 million loss for FTX on its investment in LedgerX, which the company acquired for about $298 million in August 2021, according to a copy of FTX’s 2021 annual financial documents seen by The Wall Street Journal. An affiliate of Miami International Holdings Inc., which operates a number of options exchanges in the U.S., is the proposed buyer for LedgerX. Proceeds from the sale would help FTX’s new management close the $9 billion gap in customer funds it entered bankruptcy with last year. The proposed deal “is an example of our continuing efforts to monetize assets to deliver recoveries to stakeholders,” said John J. Ray III, FTX’s chief executive. In the years before FTX filed for bankruptcy, it went on a streak of investing in and buying other crypto companies. FTX, Alameda Research and other entities controlled by FTX co-founder Sam Bankman-Fried put more than $5 billion into more than 150 startups, as well as venture firms like Sequoia Capital.