There have been several so-called "uptier" transactions over the last several years, where lenders have provided "rescue financing" to a distressed company senior in priority to existing debt. While there has been significant commentary about whether such financings are contractually permitted, there have been few decisions analyzing challenges to such transactions.1 In Bayside Capital Inc. v. TPC Group Inc.
Mediation-in-bankruptcy has been an effective tool for resolving mass tort cases.
That effectiveness has been for the benefit of all parties involved, such as:
On July 5, 2022, cryptocurrency brokerage Voyager Digital filed for chapter 11 in the Southern District of New York Bankruptcy Court, citing a short-term “run on the bank” due to the “crypto winter” in the cryptocurrency industry generally and the default of a significant loan made to a third party as the reasons for its filing. At Voyager’s first day hearing on July 8, 2022, the Bankruptcy Court asked the critical question of whether the crypto assets on Voyager’s platform were property of the estate or its customers.
DAOs, or decentralized autonomous organizations, are the latest trend in crypto. DAOs have the potential to disrupt the traditional economic system, but, they also raise significant issues of securities, tax, bankruptcy corporate law. Over the last few months, our Fintech group has issued a series of client alerts exploring these issues. You can find our complete collection below.
What the DAO? Why Everyone Is Talking About Decentralized Autonomous Organizations |
What does this mean for you? Should you stop providing goods and services? Should you call and ask for the money?
If the customer owes you a substantial amount for your services and has told you that they have no assets, what do you do?
InBailey Tool & Mfg. Co. v. Republic Bus. Credit, LLC, 2021 Bankr. LEXIS 3502 (Bankr. N.D. Tex. Dec. 23, 2021), the United States Bankruptcy Court for the Northern District of Texas clarified how aggressive a secured lender can be when enforcing its rights. The 145-page opinion details how a lending arrangement went “terribly wrong” and why awarding millions in damages was warranted.
Background
Much discussion has been had recently about the fact that cryptocurrencies (tokens and coins) do not fit neatly into a generally accepted financial asset classification. The value of most cryptocurrencies is not pegged to any tangible commodity or fiat currency.
“2 There is one inconsequential difference — § 1228(a) refers to debt ‘of a kind specified,’ while § 1192(2) refers to debt ‘of the kind specified.’” [Fn. 1]
This “inconsequential difference” quotation, from footnote 2 in the Fourth Circuit’s Cantwell v. Clearyopinion, is on the application of § 523 discharge exceptions to corporations and LLCs. The “inconsequential difference” quote, is both:
On July 11, 2022, genomic sequencing company GenapSys Inc. of Redwood City, CA filed a petition for relief under Chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware (Case No. 22-10621). The company reports $10 million to $50 million in both assets and liabilities.
With priming transactions experiencing a resurgence over the past few years, there have been a number of different routes taken by lenders with one goal in mind - Assemble a majority position and exchange, refinance or otherwise abandon their existing positions to move up the capital structure, which in turn helps increase their blended return on their exposure to a borrower and prevents a different configuration of investors from grabbing the “high ground” above them.