Good day and welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Monday, January 23. In today's newsletter, we explore how AMC Entertainment Holdings is confronting the loss of its meme-stock status as the theater industry continues to slip. In bankruptcy court, Sullivan & Cromwell LLP won court approval to represent FTX in its chapter 11 case, despite questions from customers, lawmakers and a former FTX employee about the law firm's past work for the company. And the chapter 11 filing of Genesis Global Capital caps a dark period for crypto lenders that pushed some of the industry's biggest players into bankruptcy.

Meme stock no more, AMC seeks a new lifeline. Cinema giant AMC Entertainment Holdings deftly surfed the meme-stock wave to raise billions of dollars and help it avoid bankruptcy during the pandemic, but its shares have sunk back to roughly where they were trading before the company caught fire in the online trading community.

AMC skyrocketed in 2021 on hope and hype, but has had trouble sustaining prolonged enthusiasm from its shareholders. And the movie theater business hasn't recovered like AMC or its industry peers had hoped since lockdowns lifted and people got comfortable in small gatherings again.

Other onetime meme-stock companies like Bed Bath & Beyond, Revlon and Avaya have failed to turn their share-price rallies into a sustainable financial trajectory. Can AMC avoid their fate? It will soon ask its shareholders to approve a new transaction that could help it defy the odds once again, Pro Bankruptcy's Alexander Gladstone reports.
 

FTX law firm defeats conflict claims. Sullivan & Cromwell LLP won court approval to continue representing FTX in bankruptcy following weeks of scrutiny about the law firm's work for the crypto exchange and some former executives before it collapsed.

Judge John Dorsey of the U.S. Bankruptcy Court in Wilmington, Del. rejected a challenge brought by two exchange customers who argued that Sullivan's past work for FTX and founder Sam Bankman-Fried should have disqualified the law firm from representing the company in bankruptcy. The judge also declined to admit as evidence a statement filed by a former compliance officer for FTX, Daniel Friedberg, who accused Sullivan of conflicts of interest.

• U.S. seizes additional assets tied to FTX. The Justice Department said it has seized $56 million in U.S. currency and 87 million euros, equivalent to roughly $94.5 million. The amount was in addition to a sizable stake in Robinhood Markets seized earlier this month.

The rash of failures showed how interconnected the crypto lenders were, allowing market shocks to ripple through one lender to the next, most recently to Genesis Global Capital LLC, the latest to file chapter 11.

• Crypto banks borrow from home-loan banks to plug shortfalls. Two of the biggest banks to cryptocurrency companies are rushing to stem a flood of customer withdrawals by borrowing billions of dollars from Federal Home Loan Banks, the system originally designed to support mortgage lending in the 1930s.
  
  The borrowings at Signature Bank are more than double its previous highest sum in several years. Silvergate Capital, meanwhile, didn’t have any home-loan bank borrowings a year earlier. Although helping banks shore up liquidity is part of the mission of FHLBs, backstopping the crypto industry’s fallout is arguably far removed from the original intent.

Distressed-debt investors foresee fewer defaults through next downturn. Despite a growing pile of corporate debt and signs of a nearing recession, investors that specialize in taking over troubled companies say that corporate America appears well positioned to weather a possible economic downturn later this year, Pro Bankruptcy's Alexander Saeedy reports.

• SPAC deals shrink as speculation wanes. Creators of special-purpose acquisition companies, or SPACs, are valuing companies they seek to take public at the lowest levels since the SPAC boom began. The market for traditional IPOs has also essentially frozen, because of higher interest rates and a softening economy.
• Media companies cut jobs as they brace for advertising slowdown. News publishers across the U.S. are trimming staff, as a challenging economic environment is leading advertisers to pull back on spending.

Fed sets course for milder interest-rate rise in February. Federal Reserve officials are preparing to slow interest-rate increases for the second straight meeting and debate how much higher to raise them after gaining more confidence inflation will ease further this year.

They could begin deliberating at the Jan. 31-Feb. 1 gathering how much more softening in labor demand, spending and inflation they would need to see before pausing rate rises this spring.

Risk of at-home documents. The storage of hard copies of documents at the homes of President Biden and former President Trump points to risks for companies of sensitive papers being at employees’ houses. Here's a guide on how executives can handle such risks in an era of flexible work arrangements.

This research paper from WSJ Pro Cybersecurity Research, a premium service, is being made available for free to this newsletter's readers.

Share your tips, suggestions and feedback with the WSJ Pro Bankruptcy team: Soma Biswas; Alexander Gladstone; Jodi Xu Klein; Akiko Matsuda; Jonathan Randles; Alexander Saeedy; Andrew Scurria; Becky Yerak. 

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