Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Thursday, June 23. Here's what we have on tap.

Revlon's bankruptcy filing isn't stopping day traders from piling into its stock, a head-scratching rally reminiscient of Hertz. A crypto-focused hedge fund is allegedly nearing default on bitcoin-backed loans. And a bankruptcy judge ordered Argentina's YPF to trial in a $14 billion pollution lawsuit.

Revlon ascends to meme-stock status after bankruptcy. The cosmetics maker's shares have risen for three straight days, climbing 317% in that time for its best three-day stretch on record.

Trading volumes in Revlon have also soared. Among Fidelity’s customers, which are largely individual investors, Revlon was the second most actively traded stock after Tesla on Wednesday, in terms of total buy and sell orders.

The rally defies Revlon's cash crunch, its $3.7 billion debt pile and its chapter 11 filing this month, recalling the speculative frenzy that engulfed Hertz Global Holdings Inc. when it went bankrupt in 2020.

Hertz wound up delivering a handsome payout for shareholders when it left bankruptcy last year, but there are reasons to doubt that Revlon can do the same. Bonds and loans tied to Revlon are trading at deep discounts, suggesting professional investors don't think it can cover its debts, much less provide a return to equity.

Crypto broker says Three Arrows Capital hedge fund hasn't repaid $666 million. Crypto broker Voyager Digital Ltd. said it may issue a notice of default to Three Arrows Capital Ltd. if the crypto hedge fund fails to make a loan repayment by next week.

Voyager said it is discussing legal processes to seek compensation for its potential losses. It is unable to assess how much it will be able to recover from Three Arrows, which hired legal and financial advisers after suffering heavy losses from a broad market selloff in digital assets. The hedge fund is exploring options including asset sales and a rescue by another firm.

YPF pollution lawsuit heads toward bankruptcy trial. A bankruptcy judge sent the former parent companies of Maxus Energy Corp. to trial over creditor allegations that they stripped the now-defunct subsidiary of assets and should pay as much as $14 billion for its obligation to clean up New Jersey’s Passaic River.

Judge Christopher Sontchi of the U.S. Bankruptcy Court in Wilmington, Del., declined to grant summary judgment in litigation alleging Argentina’s YPF SA and Spain’s Repsol SA hollowed out Maxus to extract its value, while leaving its environmental debts unpaid when it filed for chapter 11 protection in 2016.

The lawsuit, filed on behalf of Maxus creditors after its bankruptcy, concerns a manufacturing site on the Passaic River where a corporate predecessor made the defoliant Agent Orange decades ago. A chapter 11 trust sued YPF and Repsol in 2018, alleging they hollowed out Maxus before dumping it in bankruptcy with insufficient funding for its share of the cleanup bill, estimated at $14 billion on the high end.

Sri Lanka’s prime minister says economy faces ‘complete collapse.’ Sri Lanka’s prime minister said its indebted economy faced complete collapse, as he laid the groundwork for what are expected to be tough austerity measures as part of negotiations over its budget and an International Monetary Fund bailout. Crucial to securing an IMF deal is the swift restructuring of external debt, with some $35 billion owed to sovereign bondholders and bilateral creditors such as China and Japan.

Sri Lanka defaulted for the first time in its history last month, and residents have endured months of double-digit inflation, rolling power blackouts and acute shortages in food and medicines as foreign reserves run out.

The prime minister said advisers from financial adviser Lazard Ltd. and law firm Clifford Chance LLP were in Sri Lanka to help formulate a debt-restructuring framework, and that a high-level delegation from India and a team from the U.S. Treasury Department were set to arrive in the coming days.

Fed chair to discuss rate outlook with House. Federal Reserve Chairman Jerome Powell is set to return to Capitol Hill on Thursday morning for the second of two days of testimony, this time before the House Financial Services Committee.

• Before a Senate panel on Wednesday, he said the central bank’s battle against inflation could lead it to raise interest rates high enough to cause a recession.
• The U.S. economy faces elevated risks of a recession over the next one to two years due to rising imbalances in markets for goods and services, including labor, according to a Federal Reserve economist.
• The Federal Reserve Bank of Philadelphia's President said it is possible the U.S. economy might see a modest contraction in growth, but he expects the job market to stay strong.

Gold Standard Baking filed for chapter 11 with the U.S. Bankruptcy Court in Wilmington, Del., on Wednesday with more than $140 million in funded debt, some of which has been in default since 2020. The company is proposing to sell itself through bankruptcy with a lead bid from secured lender 37 Baking Holdings LLC, formed by investment funds and company insiders including CEO Haq Chaudary.

Mexican shadow bank faces involuntary U.S. bankruptcy. Bondholders of Mexico's Crédito Real SAB de CV petitioned a New York court to bring the troubled consumer lender under U.S. bankruptcy protection.

Affiliates of VP Bank Group, Monex Grupo Financiero and Amundi US filed the petition in the U.S. Bankruptcy Court for the Southern District of New Yok against Crédito Real, which will have the chance to argue against being placed into an involuntary chapter 11 case.

Crédito Real said Wednesday it "believes the involuntary petition is improper and was filed as a litigation tactic in the U.S. by certain alleged minority creditors to gain leverage in negotiations with the company." The business and the use of its property continue while the involuntary petition is pending, Crédito Real said.

Crédito Real was preparing a chapter 11 filing in the U.S. after a bond default in February when it abruptly scrapped those plans earlier this month and fired its U.S. advisers. Directors resigned en masse from the board last week, further clouding the company's future. — Andrew Scurria

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A Wisconsin-based municipal-bond agency has hired an adviser to explore the possible sale or debt restructuring of a Baltimore cancer-treatment center it purchased in 2018 with proceeds from a $360 million bond issue. (Bloomberg)

The fraud trial against Elizabeth Holmes’ partner at Theranos is nearing its end. (CNBC)

A purported buyer of the Limetree Bay oil refinery denied having any stake in the St. Croix facility, an unexpected announcement after it was sold out of bankruptcy earlier this year. (Virgin Islands Consortium)

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