Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Tuesday, June 21. Welcome back after the long holiday weekend.

The bottom is falling out of cryptocurrencies, putting customers at high risk if a crypto lender goes bankrupt. A strong housing market is protecting delinquent mortgage borrowers from losing their homes to foreclosure. And in bankruptcy court, Chile's Latam Airlines Group was cleared to leave chapter 11 through a contentious debt restructuring.

The crypto party is over. With markets sliding and inflation plaguing the global economy, cryptocurrencies have been among the first assets sold. Since bitcoin hit an all-time high in November, roughly $2 trillion of cryptocurrency value—more than two-thirds of all the crypto that existed—has been erased.

The crypto world is no stranger to booms and busts, but many investors are feeling this crash more acutely. When the dust settles, some crypto products and companies may no longer exist.

The carnage has spread from the cryptocurrencies themselves to companies that provide services in the market. Coinbase reported a nearly $430 million first-quarter loss in May and said that users were fleeing the platform, even as company executives sold stock and pocketed profits. Earlier this month, crypto-lending service Celsius Network LLC, which had about $12 billion in user assets, froze withdrawals. Another lender, Babel Finance, on Friday suspended withdrawals and redemptions. Crypto-focused hedge fund Three Arrows Capital Ltd. has been considering strategic options, the Wall Street Journal reported Friday.

The current flushing-out of the crypto world strikes some investors as similar to the late-1990s and internet companies. It has also shared characteristics with other bubbles throughout history, marked by speculation bordering on delusion, disregard and disrespect for risk, and greed.

A crypto bankruptcy is an investor's nightmare. Crypto exchanges and lending services provide individual investors an on-ramp to markets, but the cryptocurrency they invested might not belong to them in the eyes of a bankruptcy court.

In a chapter 11 restructuring, crypto investors would be navigating uncharted territory. Users' digital assets will likely go into the bankruptcy estate that lawyers, financial advisers, lenders and other creditors divvy up, with most customers treated as general unsecured creditors.

Crypto lenders and other intermediaries aren’t registered as broker-dealers, which provide account holders with critical protections by holding their funds separate. In a bankruptcy setting, much will depend on the contract depositors agreed to when they put their digital assets in.

• Crypto dominated Super Bowl ads. Now the message is harder to sell.
• Bitcoin steadied around $20,000 after falling below $18,000 over the weekend.
• An exchange-traded fund is launching to bet against bitcoin.

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Latam Airlines cleared to leave chapter 11 under creditor control. Latam Airlines Group SA won court approval for a restructuring that puts $5.44 billion of fresh capital into the Chilean company, moving it closer to ending its pandemic-driven restructuring after two years.

Judge James Garrity of the U.S. Bankruptcy Court of New York rejected challenges to Latam's chapter 11 plan, saying it didn't treat similar unsecured creditors differently through the planned capital raise.

The company is ceding control to creditors including Sixth Street Partners, Strategic Value Partners LLC and Sculptor Capital Management, which agreed to backstop a sale of debt and equity.

Other creditors objected to $734 million in backstop fees paid by Latam, but to no avail. The judge's ruling left open the possibility of further challenges to the restructuring in Chile, where Latam needs court and regulatory approvals to complete the process.

Revlon shares gain after bankruptcy filing. Shares of cosmetics maker Revlon Inc. gained 91% on Friday after business channel ET Now, citing sources, said India's Reliance Industries is considering buying the cosmetics company. Reliance later told ET Now "as a policy, we do not comment on media speculation and rumors."

Judge David Jones of the U.S. Bankruptcy Court in New York on Friday said he would allow Revlon Inc. to access $375 million of a $575 million loan package from senior lenders. The company is planning to use roughly $76 million of that to pay down outstanding amounts drawn on a foreign credit line, court filings show.

A lawyer for Revlon's bondholders questioned the necessity of paying down the foreign credit line, which he said will go to support businesses that aren't part of the chapter 11 case. The senior lenders' lawyer said the foreign subsidiaries are valuable assets, and a paydown of the loans is needed to stabilize those businesses. — Stephen Nakrosis and Soma Biswas

Bankrupt rig owner can tap loan. A bankruptcy judge on Thursday gave approval for ultra-deepwater drilling rig La Muralla IV to immediately draw $47 million from a $66 million bankruptcy loan.

The funding is for necessary expenses to stabilize the 10-year-old rig, which has been out of work since the expiration of a charter contract with Shell Exploracion y Extraccion de Mexico S.A. de C.V. nearly a year ago.

The rig owner, a subsidiary of Offshore Drilling Holding S.A., filed for chapter 11 with no money to cover insurance premiums and fuel costs. The rig is expected to move to the Bahamas from the Gulf of Mexico for a planned bankruptcy sale. — Akiko Matsuda

• Small businesses are losing ground in the hiring game as inflation adds to the pressures of an already tight job market.

Stocks historicall don't bottom until Fed eases. Another week of whipsaw stock trading has investors wondering how much farther markets will fall. If history is any guide, the selloff might still be in its early stages.

When the Fed began raising interest rates again this year, it said it was hoping to pull off a soft landing, a scenario in which it slows the economy enough to rein in inflation but not so much that it triggers a recession. In recent weeks, many investors and analysts have become increasingly pessimistic the Fed can pull that off.

Surging borrowing costs are making it tougher for struggling companies to raise new capital. It's also changing the deal calculus for private equity funds that buy companies with borrowed money. (Axios)

The San Antonio Symphony decided to file for bankruptcy and dissolve, saying its board of directors didn't see a path forward after a labor impasse with musicians. (New York Times)

As Revlon prepares to negotiate its restructuring after filing for bankruptcy last week, the cosmetics business still doesn't know the identity of all its key creditors, a consequence of a bizarre banking mistake by Citigroup. (Financial Times)

Mexico’s Credito Real said on Friday its board has resigned, the latest dramatic development for the troubled payroll lender after it cut ties this month with restructuring and legal advisers. (Reuters)

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