In an opinion issued on Sept. 20 by the United States Bankruptcy Court for the District of New Mexico, Judge David T. Thuma held that the Rooker-Feldman doctrine does not prevent a bankruptcy court from determining whether the automatic stay applies to pending state court litigation. See In re Shook, Case No. 24-10724-t7 (Bankr. N.M. Sept. 20, 2024) [ECF No. 54].
In many of the recent insolvencies of digital asset companies, liquidators have been appointed over companies in which digital assets have been fraudulently transferred from wallets controlled by an insolvent company into other unidentified wallets in foreign jurisdictions.
The anonymity of cryptoassets causes serious difficulties for insolvency practitioners in identifying the third parties who received funds and the location of the digital wallets.
Domestic Procedures
On 28 March 2024, the BVI Court granted the Joint Liquidators of Three Arrows Capital Ltd (in liquidation) ("3AC") sanction to make an interim distribution of up to US$100 million of 3AC's assets to its creditors in BVIHC(COM)2022/0119 Russell Crumpler and Christopher Farmer (as Joint Liquidators of Three Arrows Capital Ltd (in Liquidation)) v Three Arrows Capital Ltd (in Liquidation).
Our analysis of a recent court judgment in the ongoing liquidation of the high profile crypto-asset hedge fund Three Arrows Capital is by Nicholas Brookes and Romauld Johnson, part of Ogier's BVI team representing the joint liquidators.
Read our update on crypto insolvency issues from Three Arrows, which illustrates implications of the judgment including
The FTX Group, an international cryptocurrency exchange platform, spectacularly collapsed in November 2022, resulting in FTX Trading Limited and 101 affiliated companies filing for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court in Delaware. The Australian arm of the FTX group, FTX Australia Pty Ltd (‘FTX Aust’) and FTX Express Pty Ltd (‘FTX Express’) (collectively the ‘Companies’) was placed into administration in Australia shortly before the Chapter 11 filing.
Celsius creditors feeling the heat over preference claims
In Matter of Imperial Petroleum Recovery Corp., 84 F.4th 264 (5th Cir. 2023), the Fifth Circuit was asked to address whether 28 U.S.C. § 1961(a) – the federal statute providing for post-judgment interest – applies in adversary proceedings even though 28 U.S.C. § 1961(a) doesn’t explicitly refer to bankruptcy courts.
In earlier posts, the Red Zone has discussed the Supreme Court’s ruling in Siegel v. Fitzgerald, 142 S. Ct. 1770 (2022), which held that increased U.S.