January 2023

Revealing FTX Customer Names Would Hurt ‘Potential Reboot’, Bankruptcy Lawyer Says

Releasing the names of bankrupt crypto exchange FTX’s 9 million customers could harm a “potential reboot” of the company, attorneys for the creditors committee argued on Wednesday.

It’s the latest development in an ongoing dispute over whether the names of FTX’s creditors ought to be made available to the public. Beyond privacy concerns, lawyers for the creditors committee are now arguing that revealing those names could further harm the value of the company, and therefore harm creditors.

“There were an awful lot of retail investors here and so there is inherent value within those lists and that’s uncontroverted—I think everyone agrees with that,” Paul Hastings partner Kris Hansen, an attorney representing the creditors committee, said during a court hearing in Delaware.

“So in balancing that, we looked at it and said we’ve got two major tasks here,” said Hansen. “One is to assess the value associated with these assets from a sale perspective and to assess the value associated with these assets for a potential reboot is how we’ve been referring to it on our side. The reboot is complicated,” he said.

Hastings’s referral to the “value” of the list has to do with one of the arguments being

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January 21, 2023 by ATTORNEY

FTX Fights Sullivan & Cromwell Removal Attempt From Bankruptcy

Sullivan & Cromwell’s removal or limitation as bankruptcy counsel for FTX would “severely, if not irreparably” harm customers and creditors, the cryptocurrency exchange’s CEO John Ray told a judge.

An “army” led by the firm’s lawyers have worked under Ray’s supervision around the clock for the past two-plus months, he told Delaware Bankruptcy Court Judge John T. Dorsey in a filing. The work has stopped assets from being depleted and aided federal investigations, he said.

“The advisors are not the villains,” Ray said. “This is not the time to distract and burden the debtors.”

FTX in the Tuesday filings is defending Sullivan & Cromwell’s role as its lead bankruptcy counsel after four US senators questioned the firm’s work for the crypto exchange prior to its implosion. The US Trustee has also raised concerns about whether the firm’s disclosures have been sufficient.

Sullivan & Cromwell has advised FTX since the exchange first initiated Chapter 11 proceedings in November, listing assets and liabilities of at least $10 billion. Dorsey is scheduled to weigh in on FTX’s application to keep the firm as its main bankruptcy counsel in a Friday hearing.

In a court filing on behalf of FTX, the firm said that

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January 20, 2023 by ATTORNEY

Bankruptcy lawyer urged clients to spread COVID-19, judge says

(Reuters) – A Colorado bankruptcy judge has sanctioned an Edgewater, Colorado lawyer for “blatant misconduct,” including advice he gave former clients to try to infect the trustee overseeing their case with COVID-19 or another illness.

U.S. Bankruptcy Judge Thomas McNamara on Tuesday suspended attorney Devon Barclay from practicing in Colorado bankruptcy court for three years over his conduct while representing Matthew and Nicole Mennona, a Littleton, Colorado couple who sought Chapter 7 relief during the pandemic.

Barclay forged his clients’ signatures on their Chapter 7 petition, tried to get the bankruptcy case dismissed multiple times under “false assertions of fact,” and ignored a trustee’s discovery efforts, leading to his clients getting hit with a $2,783.50 sanction, McNamara found.

McNamara also cited a Sept. 9, 2021, email from Barclay to his clients about a letter that was intended to be sent to another lawyer. “If either of you have COVID or some other highly infectious, nasty disease — or if you know someone who does — please make sure they lick the envelope and handle it as much as possible,” Barclay said in the email.

It is unclear from the court record whether the comment was meant as a joke. Barclay

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January 19, 2023 by ATTORNEY

Our attorney said we should file bankruptcy on a $3,000 loan my husband co-signed 4 years ago

Dear Dave,

My husband co-signed a loan for an old girlfriend four years ago. Apparently, she hasn’t made a payment in almost two years, and a collection agency called him last week wanting the balance of $3,000. We make about $80,000 a year combined, and an attorney we spoke with recommended we file bankruptcy. Is this really the best thing to do?

Scarlett

Dear Scarlett,

If you have the money, and you can pay it off without putting yourselves in a bind financially, do it. That’s the right thing to do, both morally and legally. If you don’t have that kind of cash on hand, try haggling with them. See if they’ll agree to settle for $1,500. At this point, they might even take less. But if they go for the idea, do not give them electronic access to your bank account. Make sure you get the agreement in writing, too, before sending them a penny.

Here’s the deal. This collector bought the loan for pennies on the dollar. It’s an old debt, and that means the expectation for collection is very low. At the same time, your husband did co-sign for the loan. They’ll probably threaten to sue

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January 14, 2023 by ATTORNEY
January 2023
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