What We’re Reading This Week [May 20, 2022]
Law360 reports that Coinbase included new bankruptcy-related risk factors in a recent SEC filing, explaining that “custodially held” digital assets (i.e., cryptocurrency) could be considered property of a bankruptcy estate if the company were to file for bankruptcy and that Coinbase customers could be treated as general unsecured creditors, which would decrease their likelihood of recovery. Coinbase’s CEO subsequently explained that Coinbase currently has “no risk of bankruptcy” and that these additional disclosures were included only because of new guidance issued by the SEC. Nonetheless, such disclosures could result in customers finding cryptocurrency custodial services less attractive. [Law360; May 11, 2022]
The Wall Street Journal reports that the U.S. Court of Appeals for the Third Circuit will hear argument on direct appeal (bypassing the District Court) as to whether the bankruptcy of Johnson & Johnson affiliate LTL Management should be dismissed as a bad faith filing. The appeal is being pursued by the Official Committee of Tort Claimants, which comprises roughly 40,000 tort claimants who allege damages in connection with Johnson & Johnson’s talc products. The bankruptcy court previously denied the Tort Claimants’ Committee’s motion to dismiss, which was based on LTL Management’s and Johnson & Johnson’s use of a controversial Texas divisional merger statute which led to LTL Management’s creation prior to the bankruptcy (i.e., the “Texas Two Step”). [WSJ; May 11, 2022]
Reporting from Reuters indicates that Google’s Russian subsidiary plans to file for bankruptcy after Russian authorities seized its bank account, stifling its ability to pay workers and business vendors. The reporting reveals that the Alphabet Inc., which owns Google, has been under pressure from Russia for not deleting content Russian authorities have deemed illegal. [Reuters; May 18, 2022]
