Turnarounds & Workouts
News for People Tracking Distressed Businesses
SEPTEMBER 2022
VOLUME 36 , NUMBER 9
www . TurnaroundsWorkouts . com
In This Issue :
Experts Discuss Novel Issues in Crypto Bankruptcy
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Research Report : Who ’ s Who in Celsius Network , LLC Page 7 →
Research Report : Who ’ s Who in Revlon , Inc . Page 12 →
Special Report : Restructuring Departments of National Accounting Firms Page 17 →
Worth Reading : The Heroic Enterprise : Business and the Common Good Page 20 →
Special Report : European Restructuring Practices of Major U . S . Law Firms Page 22 →
Crypto Winter Is Here
By Christopher Patalinghug
Three major crypto companies have sought bankruptcy protection following a recent financial crisis in the industry that investors are calling the “ crypto winter .” These platforms ’ collapse follows the crypto industry ’ s breakout years in 2020 and 2021 that saw Bitcoin reaching new all-time highs of more than $ 20,000 in December 2020 and even hitting $ 68,990 in November 2021 .
As the economy continues to recover from the COVID-19 pandemic , the Federal Reserve early this year started to aggressively tighten monetary policy to curb high inflation . The move spooked many investors , triggering sharp selloffs in cryptocurrencies and other risky assets . The sharp declines in crypto prices in early 2022 caused a liquidity crisis that led to the collapse of Three Arrows Capital Ltd ., a $ 10 billion crypto hedge fund , and the bankruptcy filings of crypto lenders Voyager Digital Holdings , Inc . and Celsius Network , LLC . The crypto market volatility also led to the $ 60 billion collapse of Luna and its associated stablecoin Terra USD ( UST ) and caused the world ’ s largest stablecoin Tether ( USDT ) to briefly lose its peg to the U . S . dollar in May 2022 .
Three Arrows is the subject of insolvency proceedings in the British Virgin Islands and parallel Chapter 15 bankruptcy proceedings in the Southern District of New York . Voyager and Celsius commenced Chapter 11 proceedings also in the Southern District of New York .
Uncharted Waters
Robert Gayda , a partner in law firm Seward & Kissel ’ s Corporate Restructuring and Bankruptcy group , and Andrew J . Matott , an associate in the firm ’ s Litigation and Corporate Restructuring & Bankruptcy groups , note that until Voyager ’ s bankruptcy filing , only one significant cryptoasset player had filed for bankruptcy protection in the U . S ., which was Cred , Inc . in 2020 . The Cred case , however , was precipitated more by fraud than any systemic issues related to the assets
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