In the wake of several high-profile collapses of cryptocurrency exchanges, most notably FTX, Celsius, and Voyager, the state of the digital asset landscape is ever-changing, with more questions and landmines than clear paths forward. Among the many issues that arise in these bankruptcy cases is the question of how to treat and classify digital assets, especially cryptocurrencies—e.g., who owns the cryptocurrencies deposited by customers.

US governmental authorities, including the US Department of the Treasury, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, took actions to provide both insured and uninsured depositors of Silicon Valley Bank (SVB) (as well as Signature Bank) access to their deposits beginning Monday, March 13. However, despite these actions, many customers are still dealing with the aftermath of an uncertain weekend, and practical questions remain to be answered.

Insight

Consider a lender that extends a term loan in the amount of $1 million to an entity debtor. The loan is guaranteed by the debtor’s owner. If both the debtor and the guarantor become subject to bankruptcy cases, it is settled that the lender has a claim of $1 million (ignoring interest and expenses) in each bankruptcy case. However, the lender cannot recover more than $1 million in total in the two cases combined. (Ivanhoe Building & Loan Ass'n of Newark, NJ v. Orr, 295 U.S. 243 (1935).)

When a business entity that is regulated by the Federal Energy Regulatory Commission (FERC) is closely related to another business entity, FERC takes the position that under some circumstances it may treat the two different legal entities as if they were one single entity.

In retail bankruptcies, it is important for suppliers consigning goods to merchants to be aware of the commercial law rules governing consignments. Disputes among consignors, inventory lenders, and bankruptcy debtors have been arising frequently in retail bankruptcy cases. Disputes like these can be avoided if consignors consider the basics of commercial law rules governing consignments, particularly under the Uniform Commercial Code, and take steps to protect their rights and interests.

On February 17, the Federal Deposit Insurance Corporation (FDIC) and the Securities and Exchange Commission (SEC) proposed a joint rule that would govern the resolution of large broker-dealers that are designated as “covered financial companies” under the Orderly Liquidation Authority (OLA) provisions (Title II) of the Dodd-Frank Act.

A liquidator has been appointed to supervise the winding up and sale of the assets of Union of Canada Life, one of Canada's oldest life insurance companies, by order of the Ontario Superior Court of Justice.

Union of Canada applied under the Winding Up and Restructuring Act (WURA) for a Winding Up Order and the appointment of Grant Thornton as liquidator to take possession and control of the company and conduct the sale under the protection of a stay of proceedings.

Catalyst Paper Corporation (TSX:CTL) has taken the unusual step of publicly announcing that, although it is not in bankruptcy, the company is seeking court protection under Chapter 15 of the US Bankruptcy Code.

The Richmond, BC-based company reported earlier that it had received an initial court order under the Canada Business Corporations Act (CBCA) to begin a consensual restructuring process with its noteholders. It made the new announcement to correct allegations of bankruptcy that appeared in some media reports following its initial statement.

Timminco Limited (TSX:TIM) has been granted creditor protection under theCompanies' Creditors Arrangement Act until February 2, 2012 by the Ontario Superior Court of Justice. Timminco produces silicon metal for the chemical, aluminum and electronics/solar industries through its 51%-owned production partnership with Dow Corning, known as Québec Silicon. Timminco is also a producer of solar grade silicon for the solar photovoltaic energy industry, through Timminco Solar, a division of its wholly owned subsidiary, Bécancour Silicon.

Cellfor, a privately held company that bills itself as the world's first and largest commercial supplier of conifer varietal seedlings to the forest industry, has obtained a court order granting it protection under the Companies' Creditors Arrangement Act.

The initial order of Mr. Justice Harris of the Supreme Court of British Columbia grants a stay of proceedings against all actions and creditors until January 16, 2012, when a further hearing is scheduled to consider a possible extension of the stay period.