Below is our initial take on recent bankruptcy-related developments:
Blink Fitness, a gym chain owned by Equinox, filed for Chapter 11 bankruptcy protection in Delaware, citing assets and liabilities each ranging from $100 million to $500 million. The company plans to continue operations while seeking a sale during the bankruptcy process and has secured $21 million in financing from its lenders.
S&K Take: Another fitness industry casualty chalked up to the pandemic. Blink is a subsidiary of Equinox, but is a very different entity, shooting for the “high value, low price” demographic. The debtors have incremental financing from their prepetition lenders, and, surprise, they are rolling up a bunch of it. DIP is approximately $73 million, with $21 million in new money and a little more than a 2x roll-up. Remember when those were at least a little unusual? The debtors are continuing a prepetition sale process with a plan of liquidation as an alternative. No stalking horse has been identified. If you are looking for 111 location bank-for-your-buck fitness chain, you may just be in luck.
While trying to navigate hundreds of lawsuits accusing the direct sales company of having cancer-causing talc powder in its products, Avon filed for Chapter 11 bankruptcy protection. Avon's operating businesses outside the U.S. aren't part of the proceedings and continue business as usual.
S&K Take: Talc related litigation is all the rage today and Avon is no exception. Let’s note at the outset, that the Avon you are probably thinking of (the Avon Company), which was the North American beauty business, was spun out in 2016. The debtors are the holdcos that own the non-debtor foreign subs. The parent of the holdcos, Natura, is acting as the DIP lender, prepetition lender, stalking horse, and settlement counterparty. So there is that. Basically, Natura is putting up a DIP, credit bidding for the debtors’ assets, and forgiving over $500 million in prepetition debt while also contributing $30 million in settlement value to wipe the slate clean with respect to its talc liabilities. These usually aren’t very simple, so let’s see how this strategy shakes out.
According to a Bloomberg report, health care company Johnson & Johnson (J&J) has enough support from claimants for its proposed $6.5 billion settlement of tens of thousands of lawsuits claiming its baby powder and other talc products were the root of claimants’ cancer. Over 75 percent of claimants voted in favor of the $6.5 billion proposal, an obstacle the health care company set for a third try at placing a subsidiary bankruptcy protection to settle the litigation.
S&K Take: According to a Bloomberg report, health care company Johnson & Johnson (J&J) has enough support from claimants for its proposed $6.5 billion settlement of tens of thousands of lawsuits claiming its baby powder and other talc products were the root of claimants’ cancer. Over 75 percent of claimants voted in favor of the $6.5 billion proposal, an obstacle the health care company set for a third try at placing a subsidiary bankruptcy protection to settle the litigation.
Bankrupt crypto lender Celsius is suing Tether, the issuer of USDT, for $3.3 billion, alleging fraudulent transfers of bitcoin before Celsius' bankruptcy. Tether denies these claims, calling the lawsuit a "shakedown" and asserting that its actions were lawful and in accordance with their loan agreement.
S&K Take: Now that most of the crypto bankruptcies are confirmed, the litigation phase is kicking into full gear. Unscrambling the egg won’t be easy. The Celsius post-confirmation entity is doing its part, filing a complaint against Tether for a massive headline number. The claims can be broken down into a few buckets. There are claims (for about 18,000 BTC) alleging that Tether collateralized an otherwise unsecured claim during the 90-day period. The larger claim (although the above is hardly something to sneeze at) is based on the allegation that Tether liquidated collateral at the nadir of BTC’s value in contravention of the terms of the parties’ agreements.
