Good day and welcome to WSJ Pro Bankruptcy’s Daily Briefing. It’s Friday, May 19. In today’s briefing, Wall Street heavyweights Apollo Global Management and Fortress Investment Group are locked in a bidding war for bankrupt cryptocurrency lender Celsius Network. FTX is seeking to claw back more than $240 million in funds that went to acquire stock trading platform Embed to repay creditors and customers. And troubled retailers that stayed alive during the pandemic are filing for bankruptcy at the highest rate since 2020. 

Celsius could get new life from Wall Street. Two Wall Street heavyweights are locked in a bidding war for bankrupt cryptocurrency lender Celsius Network.

Apollo Global Management and senior executives at distressed-debt specialist Fortress Investment Group are each backing competing groups that aim to restart Celsius under new management, people familiar with the matter said. Each proposal would kick in around $50 million to help Celsius resume some operations as a publicly traded company owned mostly by its creditors, according to people familiar with the matter and investor presentations viewed by The Wall Street Journal.

The two groups have been submitting bids and counterbids during an auction that has lasted several weeks, adding sweeteners and, in at least one case, soliciting millions of dollars from additional investors to join a consortium, some of the people said.

than double the total for 2022, making this the most active year since the onset of the pandemic, according to BDO, which keeps track of retail bankruptcies for its semiannual reports.

Discount home-goods chain Christmas Tree Shops, its former parent Bed Bath & Beyond and wedding-gown supplier David’s Bridal have filed for chapter 11 over the past several weeks, hurt by wage and price pressures and changing consumer preferences. More bankruptcy filings or rescue deals are expected among retailers on weak financial footing, especially companies that rely on discretionary spending.

FTX seeks to claw back $240 million from Embed deal. Bankrupt cryptocurrency exchange FTX is suing former chief executive Sam Bankman-Fried and others over the acquisition of stock trading platform Embed, looking to claw back hundreds of millions in funds to repay creditors and customers.

The lawsuit alleges former FTX executives did little due diligence before an “astronomical” $240 million was paid for a business now valued at no more than $1 million, the highest bid received in bankruptcy for the asset, according to the lawsuit filed Wednesday in the U.S. Bankruptcy Court in Wilmington, Del.

BlockFi prematurely solicited votes for chapter 11 plan, court ruled. A bankruptcy judge on Thursday determined that bankrupt cryptocurrency lender BlockFi violated a section of the bankruptcy code by prematurely promoting its restructuring plan that hasn’t been approved by the court.

In an emergency hearing requested by creditors, Judge Michael Kaplan of the U.S. Bankruptcy Court in Trenton, N.J., told BlockFi lawyers that the company shouldn’t have promoted its proposed restructuring plan to the public on its website and via social media when it hasn’t been vetted by the court. “The court in all candor takes issue with the manner in which these communications were made,” Judge Kaplan said.

The company’s communications promoting the plan included a FAQs section of its blog post that stated, “Why should I vote to accept this plan?” The question was later removed after complaints from creditors, according to a court filing. In addition, a letter to creditors recently filed with the court said the proposed plan is “the fastest way to return the funds” held in wallet accounts to customers. 

The proposed plan is to liquidate BlockFi’s cryptocurrency lending platform after the company concluded that selling the business to a new owner wouldn’t generate enough value for its creditors.

— Akiko Matsuda

UBS’s Credit Suisse quandary. UBS Group has a quandary after buying Credit Suisse Group: Reward shareholders upfront by jettisoning the smaller bank’s Swiss domestic business, or prepare for a painful integration that would make it even more dominant in its home market.

Switzerland’s two largest banks by assets are combining after Credit Suisse lost the confidence of customers and investors and needed rescuing in mid-March. UBS Chief Executive Sergio Ermotti has signaled that integration will start right away in overlapping areas such as global investment banking, but that all options are being considered for the Swiss business.

“The greatest generator of value is really going to be UBS keeping it and eliminating the overlap,” said Octavio Marenzi, CEO of consulting firm Opimas. “It’s also the most radical and difficult thing to do.”

The billionaire, a real-estate investor since the 1960s, started a company while he was a student at the University of Michigan. A corporate raider who invested across industries—a disastrous buyout of newspaper company Tribune Co., a gourmet ice-cream sandwich maker, industrial manufacturers and a barge company—he was known for his bluntness and a contrarian tack. Zell called himself the “Grave Dancer” because of his interest in troubled companies.

How close could the U.S. get to a default in June? In a matter of weeks, the U.S. could become unable to pay the nation’s bills. Republican leaders in the House and the Biden administration spent this week working toward a deal that would lift the debt ceiling—the statutory limit on borrowing.

This fiscal year the federal government will spend about $1.5 trillion more than it collects in revenue. It covers that deficit by borrowing. If Congress doesn’t raise the debt ceiling, the federal government won’t be able to meet all of its spending obligations, such as interest on existing debt, Social Security benefits or military salaries. That would represent an unprecedented default with unknown and potentially serious economic consequences.

• More consolidation lies ahead for private equity as firms look to amass fee-generating assets.
• Renewable-energy companies are leasing warehouses at a faster pace, boosting the otherwise sagging demand for industrial real estate.
• Companies outside of the tech sector are facing an uphill climb in recruiting Big Tech’s laid-off software developers, engineers and data scientists.
• Changes to how companies account for renewable energy may lift the veil on actual usage vs. credits bought to offset fossil-fuel use.

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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