On August 24, 2023, the U.S. Court of Appeals for the Second Circuit held in Kirschner v. JP Morgan Chase Bank, N.A. et al. that certain syndicated term loans2 at the center of a transaction involving JP Morgan Chase and other banks were not securities under state law. While the Second Circuit did not foreclose the possibility that syndicated term loans could be securities under different circumstances,3 for now Kirschner cements the long-standing view -- following Banco Espanol de Credito v.
In recent times, the corporate landscape has witnessed a significant shift as Environmental, Social, and Governance (ESG) initiatives gain traction among investor and consumer groups. Companies operating in carbon-centric industries, particularly those involved in fossil fuel extraction, are experiencing challenges in securing new funding. One such company, Nashville-based driller Alpine Summit Energy Partners, has made headlines by seeking bankruptcy protection, citing the lack of funding in the oil and gas industry due to growing ESG and sustainability concerns.
Investing in or acquiring distressed assets can be a lucrative investment strategy for those with a healthy risk appetite and a roadmap for sourcing and evaluating quality assets.
Following a steep run-up in crypto asset prices and valuations of crypto-adjacent businesses in the last two years, there has been a sharp increase in companies and assets in the space looking at deeply distressed valuations, liquidity crunches or formal insolvency or bankruptcy proceedings.
On May 8, 2023, online cryptocurrency exchange platform Bittrex, Inc. and three of its affiliated entities (collectively “Bittrex”) filed for chapter 11 to wind down their U.S. and long-dormant Malta operations. The bankruptcy filing followed costly regulatory investigations and an April 17, 2023 SEC enforcement action alleging that Bittrex improperly sold crypto assets that were securities. Unlike other crypto bankruptcies, Bittrex did not risk, hypothecate, or loan cryptocurrencies needed to meet its contractual obligations to its customers.
Indonesia Authors: Miriam Andreta and Hans Adiputra Kurniawan 1. Bankruptcy and Liquidation: Updates Brought by PPSK Law With respect to bankruptcy and liquidation of certain parties (public listed companies, banks, non-bank financial institutions), there are certain updates and clarifications set out in Law on Development and Improvement of Financial Sector (also known by its local abbreviation “PPSK Law”) - which came into effect on 12 January 2023 (except for certain provisions that are explicitly intended to take effect otherwise).
On May 5, 2023, the SEC filed a civil complaint in the U.S. District Court for the Northern District of New York against a mutual fund’s adviser for aiding and abetting violations of Rule 22e-4 (the “Liquidity Rule”) by the mutual fund it advised (the “Fund”) and whose Liquidity Risk Management Program (“LRMP”) it administered.
The Hong Kong High Court has found that cryptocurrencies are property in a landmark case, further boosting the city’s virtual asset industry and its ambition to become the Asian crypto hub.
Crypto firm bankruptcies and resulting disruption in the crypto ecosystem will continue to exacerbate liquidity and regulatory concerns in this space. Signs of contagion are evident as prices of almost every cryptocurrency type have halved in recent months. Since all participants supporting the crypto ecosystem are at risk, managing that risk is critical.
Fund managers should be prepared on multiple fronts, as the following examples illustrate:
Everything, everywhere, all at once is our risk thesis for 2023, but one must not forget about concentration risk. This issue has rocketed up diligence agendas for LPs and GPs alike as the collapse of Silicon Valley Bank proved it really was the bank for venture capital.The entry of SVB into receivership on March 10, 2023 highlighted just how central it had become to U.S.
FTX. Blockfi. Voyager. Celsius Network. Genesis. Silvergate Capital Corp. Whether due to alleged corporate fraud or the waterfall effect of a downward spiraling industry, as the past year has unfolded more and more cryptocurrency giants—previously touted by pundits and celebrities as sound new age investments—have filed for relief under the United States Bankruptcy Code.