Over recent years, a prolonged period of low interest rates, together with a competitive financing market, has resulted in greater leverage and control for private companies (and their sponsors) when it comes to negotiating terms with current and potential creditors. There has also been, as a consequence of this dynamic and the general availability of capital, an expansion in debt document flexibility over the course of the last decade.
On May 8, cryptocurrency platform Bittrex filed for chapter 11 in Delaware. Bittrex’s first day filings emphasize that, unlike many other crypto filings over the past year, this case is not a “free fall” bankruptcy. In fact, a plan has already been filed, and the first day declaration said the debtors “took extensive action pre-petition to ensure full customer recovery, and plan to swiftly bring these chapter 11 cases to a responsible conclusion.”
Federal Deposit Insurance Corporation (“FDIC”) Chair Martin Gruenberg gave remarks to the Cities for Financial Empowerment Fund 2023 Bank On National Conference yesterday in which he said that the FDIC “shares the Bank On movement’s commitment to advancing Americans’ economic inclusion in the banking system.”
The High Court has held that certain assets sold by a company around the time of its administration were subject to a fixed charge rather than a floating charge and as such, the sale proceeds were not to be distributed to preferential creditors or unsecured creditors: Avanti Communications Ltd, Re [2023] EWHC 940 (Ch).
The hits keep coming for student loans in bankruptcy.
This time the hit is this:
- student loans for attending medical school do not qualify as “commercial or business” loans for Subchapter V eligibility.
The central finding, for a medical student who worked as an employee for ten years before becoming an entrepreneur, is this:
- “the gap between incurring the debt and actually engaging in . . . commercial or business activity as an owner is simply too great.”
Background
The continued fall-out of the high-profile collapse of the Three Arrows crypto fund has seen another development, with the BVI Court permitting alternative service by Twitter after the collapsed fund's directors failed to appear for examination before the BVI Court. [1]
In years past defaulting lender mechanics in a subscription credit facility may have been viewed as boiler plate language and, in most cases, the relevant provisions have not received much attention. In light of recent events in the banking industry, defaulting lender provisions have gained some renewed attention. In this article we take a look at the current general state of defaulting lender provisions and the impacts on the lender and borrower.
A mortgage loan repurchase facility (more casually referred to as a "repo") is a financing structure commonly utilized to finance mortgage loans. These facilities are utilized by both residential and commercial mortgage loan originators and aggregators to finance mortgage loans that they originate or acquire. The structure is favored by liquidity providers in the mortgage loan finance arena due to its preferential "safe harbor" treatment under the United States Bankruptcy Code (the "Bankruptcy Code"), as further described below.
Background
Several recent insolvencies of popular crypto fin-techs have shaken the crypto markets, eroding investors’ trust in digital assets in general and their future reliability.
The European Union's (EU) response is to implement new and clarify existing safeguards for investors to protect their property in the event of an insolvency. In this context, the Markets in Crypto Assets Regulation (MiCAR) is to be implemented throughout the EU.
Legislative changes
After a turbulent weekend, the news on Monday morning that HSBC had acquired Silicon Valley Bank UK (SVB UK) caused the UK tech community to breathe a huge sigh of relief.
It was also a very different outcome to the one that seemed destined on Friday when the Bank of England announced it intended to put SVB UK into a bank insolvency procedure.