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Jared Ellias Profile picture
Jared Ellias
@jared_ellias
Professor of Law at Harvard Law School. Research focuses on corporate bankruptcy and corporate governance.
Apr 2, 2021 • 16 tweets • 9 min read
A new Examiner's report explains why Cred, an $80 million crypto-firm, filed for bankruptcy.

It's a fascinating tale of bad financial intermediation with at least one key takeaway: "don't put an escaped fugitive in charge of capital decisions."

(1/
dropbox.com/s/aftf3sfumudt… First, some background. Cred essentially ran two businesses. One was a lending program where you could deposit your crypto assets at Credit and borrow against them.

They called this "CredBorrow."

(2/
Dec 21, 2020 • 16 tweets • 5 min read
A quick round-up of the bankruptcy related provisions in the new Stimulus bill, which can be found here.

There's not a ton here, but there are some things worth noting.

docs.house.gov/billsthisweek/…

1/ First, the bill includes a change I advocated for (along with a committee of bankruptcy scholars): PPP loans can now be borrowed in Chapter 11. No more choosing between Chapter 11 and PPP loans!

(2/
May 27, 2020 • 20 tweets • 6 min read
Large firms commonly file for Chapter 11 and pledge, in the DIP loan contract, to implement senior creditors' preferred restructuring transaction.

@k_m_ayotte and I study this type of deal in a🚨NEW WORKING PAPER🚨: "Bankruptcy Process for Sale"

papers.ssrn.com/sol3/papers.cf…

(1/ Image Some background: Congress gave control of Chapter 11 debtors to incumbent management. But managers are now often agreeing to give up a lot of that control in exchange for DIP financing.

Neiman Marcus' recent bankruptcy filing provides a good example of how this works.

(2/
May 8, 2020 • 12 tweets • 3 min read
This pandemic is especially unfair to seasonal businesses that make their money during summers.

Yesterday's Chapter 11 of Galileo, a summer camp that was on pace to enroll 45,000 campers this summer, illustrates how hard it will be for seasonal businesses to avoid bankruptcy (1/ Prior to COVID-19, Galileo was going to enroll a record number of campers in 70 campuses in California, Illinois and Colorado. But then disaster struck in March with shelter-in-place orders that forced the camp to cancel its summer.

(2/
Oct 10, 2019 • 10 tweets • 2 min read
It's very possible PG&E is being extra-conservative with power shutdowns because a fire during the firm's bankruptcy case would be harder for them to deal with than a fire outside of bankruptcy. This thread explains why (1/ Outside of bankruptcy, companies get sued all the time. PG&E has a very problematic liability environment, as under California law it can be stuck paying for fire damages involving its equipment even if it wasn't negligent (2/