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East Africa: Restructuring Quarterly Bulletin March 2023

28 April 2023
– 29 Minute Read



In the March edition of our quarterly restructuring bulletin, we highlight developments in relation to:

  1. Economic Overview
  2. Corporate Updates
  3. Solvent Restructuring, Liquidation and Administration
  4. Distressed Companies in the Press
  5. Interesting Developments in Case Law

Economic Overview

The Kenyan Government has indicated that it intends to list state-owned enterprises to allow for private investment. This change of ownership is intended to raise more funds in the short to medium term to address the Government’s increasing debt servicing obligations.

The Government has also committed to invest in infrastructure, manufacturing, healthcare and climate change; and create a business environment conducive to socio-economic transformation.

Inflation has continued to rise due to the uncertainty around the Russia-Ukraine war. In addition, the local currency has been losing its value against the USD, dropping from KES 123 at the start of the year to KES 130 in Mid-March. Despite inflation and the performance of the local currency, the Central Bank of Kenya’s CEO’s Survey for January 2023 cited increased confidence from industry leaders that demand/orders, production volumes and sales would improve in 2023. It indicated that sectors likely to benefit would be the wholesale and retail trade, financial services and education.

In the first few months of the new administration, there have been great strides in the digitisation of government services including the launch of a pilot site by the Official Receiver. We wrote about the pilot site here.

Corporate Updates


  • February had the highest number (eight) of petitions for the liquidation of companies by the court.
  • Administration continues to be underutilised as an alternative to liquidation with only one application filed this year.
  • Banks that had frozen or cut dividend pay-outs for investors during the Covid-19 disruptions have resumed or increased the dividend pay-outs this year.
  • Absa Kenya, Standard Chartered Kenya, Stanbic Kenya, Equity Bank Ltd and NCBA Group have increased their dividend pay-outs by between 15% to 50% for 2022 compared to 2021. 

Solvent Restructuring, Liquidation and Administration

  • Solvent restructuring

    Bowmans has been involved in various deals and transactions involving solvent restructurings. Our experience has been that the rationales for solvent restructuring include:

    • Ensuring efficient operations through the consolidation of businesses and assets in the country.
    • Raising additional funds through offering equity or other repayment terms.
    • Winding down dormant companies to focus on entities with more viable operations.
    • Simplifying existing company structures before proposed transactions such as a sale or new investment.
    • Maximising shareholder value in companies and partnerships. 
  • Liquidation

    There were eight petitions for the liquidation of companies filed in February 2023. Save for nine filings in October 2022 and February 2020, this February’s filings are the highest filings in a single month since the Official Receiver started publishing the records in 2015. 

  • Administration

    Administration continues to remain underutilised as a rescue process in Kenya. Only one application to the court to place a company under administration has been filed in 2023. No administrator has been appointed through direct appointment this year. Over the same period last year, there were six companies placed under administration by the court and through the direct appointment of administrators.

Distressed Companies in the Press

Several companies in financial distress have appeared in the press lately:

  • Invesco Assurance Company Ltd (Invesco) – The Insurance Regulatory Authority (IRA) announced a liquidation order had been issued against Invesco in February this year. The IRA stated that the Policyholders Compensation Fund will compensate affected claimants. The company only paid 48 207 claims out of the 3.6 million claims filed by policyholders in the fourth quarter of 2022.
  • Cytonn High Yield Solutions LLP and Cytonn Real Estate Project Notes LLP – The High Court ordered the liquidation of Cytonn High Yield Solutions LLP (CHYS) and Cytonn Real Estate Project Notes LLP (CPN) that had earlier been placed in administration in a bid to save the businesses from insolvency. CHYS reportedly had 3 000 investors that had invested KES 11 billion. CPN had 866 investors that invested approximately KES 4 billion.
  • Royal Swiss Bakery Ltd – The High Court allowed a petition for the liquidation of Royal Swiss Bakery Ltd, which was filed by the company. At the time of filing the application, the company’s assets had a book value of approximately KES 188 million against liabilities of KES 265 million.
  • Chase Bank Kenya Ltd (in Liquidation) – In our December bulletin, available here, we reported that the Capital Markets Authority (CMA) had imposed sanctions on certain former board members, senior management and the reporting accountant of Chase Bank Kenya Ltd (in Liquidation) (CBKL). One of the former non-executive directors of the lender has since filed a petition challenging the imposition of the sanctions by the CMA.
  • Builders – Builders, a construction and building retailer has announced that it is closing its Kenyan business. Builders is a subsidiary of South African retailer Massmart. Builders has invested approximately KES 500 000 (approx. USD 3 819) since opening its doors for business in Kenya.
  • Zumi – Zumi an e-commerce startup announced it is shutting down operations in Kenya due to its inability to raise the funding necessary to sustain its operations. The company employs approximately 150 people. Previously, in 2016, the company had shut down due to digital advertising revenue constraints. It re-opened as an e-commerce startup in 2020. Zumi has received disclosed investments of about USD 970 000 since its inception in 2016. Before shutting down, Zumi achieved over USD 20 million in sales and acquired 5 000 customers.
  • EkoRent Africa (Nopea) – 66 cars owned by electric vehicle taxi company Nopea, have been put on auction after the company closed operations in Kenya. The company shut down operations after EkoRenty Oy, a majority shareholder of Nopea, declared insolvency in Finland. InfraCo Africa Ltd, a minority shareholder, then filed for the liquidation of Nopea in Kenya.
  • Kenya Airways – Kenya Airways has announced that it will resume paying workers’ provident fund contributions (which have been frozen during the Covid-19 pandemic). However, the company noted that it would not be obligated to backdate payments to cover the payments it missed during the suspension. The non-payment of provident funds was the primary reason for a pilot strike in the fourth quarter of 2022. 

Interesting Developments in Case Law

  • Statutory demands

    Since the beginning of the year, there have been two key High Court decisions that revolved around the question of setting aside statutory demands. Under the Insolvency Act 17 of 2015 (Act), a statutory demand is a demand for payment of a debt that is issued by a creditor to a debtor. It is one of the tests used to determine if a company is unable to pay its debts and should be liquidated or placed under administration. The two cases are:

    Danish Breweries Company East Africa Ltd v Erro Immobilienverwalttungsgesellschaft MBH [ERRO GMBH]
    In this case, the Court declined to set aside a statutory demand on the basis that the company did not furnish sufficient evidence to show that the debt was disputed. The Court held that after a statutory demand is issued and the debt is unpaid, the burden shifts to the debtor to show that it is solvent and able to pay its debt. In this case, the acknowledgement of the debt was issued by the shareholders of the company. The Court held that even if the shareholders were considered a separate legal entity from the company, there was still evidence that the company had failed to answer the statutory demand.

    Home Afrika Ltd v Ecobank Kenya Ltd
    In our newsflash here, we discussed a recent High Court decision that set aside a statutory demand against a guarantor. The Court held that a creditor is precluded by section 97(1) as read together with 97(5) of the Land Act, 2012 from pursuing enforcement action against a guarantor if the chargee had purchased the charged property pursuant to the leave of the court. The legal position in Kenya in respect of the realisation of securities is that a chargee has the right to seek enforcement against a guarantor and the chargor whether simultaneously or otherwise. A chargee is under no obligation to first seek recovery against the chargor before seeking enforcement against a guarantor. Having said that, the decision does create the risk that similar decisions may be made by the courts if faced with similar facts. It would appear that filing liquidation proceedings against guarantors may not be a viable recovery solution, as statutory demands can be set aside by the court if the debt is disputed. 

  • Only the liquidators have the power to sue in the name of an institution

    In Rinascimento Global Ltd & 13 Others v Deloitte & Touche Kenya, the liquidator of Chase Bank, the Kenya Deposit Insurance Corporation, filed an application seeking to strike out Chase Bank from the suit. The main suit concerned a dispute in which 13 shareholders of Chase Bank had filed a professional negligence claim against Deloitte & Touche Kenya alleging that the auditors had been negligent and should be held liable for the damages suffered by the shareholders when Chase Bank was placed in liquidation.

    In its determination of the application, the High Court held that Chase Bank should not be joined to the suit as a plaintiff without the consent of the liquidators. It was held that under section 55(1)o of the Kenya Deposit Insurance Act, only the liquidators have the power to sue in the name of an institution in liquidation, and therefore, the plaintiffs could not appropriate Chase Bank’s name to pursue the defendant. The Court struck out Chase Bank from the suit.


by Brian Kalule, and Jonathan Kiwana of AF Mpanga Advocates

Revision of Minimum Capital Requirements for Financial Institutions

On 16 November 2022, the Minister of Finance issued The Financial Institutions (Revision of Minimum Capital Requirements) Instrument 2022 (SI). The SI required that each bank should have a minimum paid-up cash capital of not less than UGX 120 billion by 31 December 2022 invested initially in such liquid assets in Uganda as the Central Bank would approve. The SI further stipulated that each bank have a minimum paid-up cash capital of not less than UGX 150 billion by 30 June 2024 invested initially in such liquid assets in Uganda as the Central Bank would approve. Regarding non-bank financial institutions, the SI directed that each of these have a minimum paid-up cash capital of not less than UGX 20 billion by 31 December 2022 and UGX 25 billion by 30 June 2024 also invested initially in such liquid assets in Uganda as the Central Bank would approve.

The revision in minimum capital requirements according to the Central Bank is intended to match the dynamism in the economy, incentivise shareholder commitment and enable institutions to withstand shocks. The Central Bank also seeks parity with its regional peers as Uganda currently has the lowest paid-up capital.

As a result of the SI, many financial institutions have embarked on the process of increasing their paid-up share capital to ensure compliance as well as to ensure that they remain compliant if future provisions eat into their capital. Whereas, in principle, the increase should be good for the industry, combined with the increasing cost of compliance, it is expected that the SI will result in quite a bit of restructuring activity in the next couple of months. It is expected that institutions that cannot increase their capital by themselves will seek additional investors or investment from existing shareholders, merge, be acquired or wind up their operations.

Insolvency (Amendment) Act, 2022

Towards the end of last year, the Insolvency (Amendment), Act 2022 came into force introducing amendments to the primary law regulating insolvency in Uganda. The Act, amongst other things, seeks to bring the law into greater conformity with the UNCITRAL Model Law on cross-border insolvency, provide for post-arrangement and post-administration financing, create new offences relating to the dealing in assets that are subject to insolvency proceedings and provide creditors with further protection and remedies.

Some of the provisions under the Act are summarised below.

  • Unlawful dealings with assets It is now an offence for a person to conceal, dispose of or create a charge on property or remove any part of it with the intention of depriving or delaying a creditor’s claims within two years before the commencement of insolvency proceedings.
  • Reduction in years of bankruptcy restrictions Under Section 9 of the Act, the number of years in respect of restrictions on a discharged bankrupt, has been reduced from 5 to 2 years. This is meant to reduce stigmatisation associated with bankrupts and help with their rehabilitation.
  • Delivery of documents on the Registrar of Companies Under Sections 10 and 11 of the Act, where a court makes an order in insolvency proceedings, the same is to be served on the Registrar of Companies/ Official Receiver within seven days of making the order. This is meant to achieve coherence and order in insolvency proceedings.
  • Post arrangement and post-administration financing The Act creates Section 126A which allows insolvent persons, with the consent of the creditors and with the approval of the Court, to obtain or borrow finances and grant security over the property of the debtor for purposes of implementing an arrangement or administration deed. This financing is not to exceed the value of a debtor’s unnumbered assets at the time of arrangement or assignment.
  • Right of creditors to apply for interim order The Act creates Section 137A under which a creditor can now apply to the Court for an interim protective order affording creditors further protections/remedies in insolvency proceedings.
  • Access to Information The Act creates Section 259A by which persons may access information or data in the possession of a trustee, receiver, liquidator, administrator or supervisor in order to promote transparency and accountability in insolvency proceedings.

Overall, it is thought that the Insolvency (Amendment) Act, 2022, will fill gaps in the insolvency legal regime and bring it into closer conformity with international best practices.


Despite the challenges presented by the war in Ukraine, the 2023 economic outlook for Tanzania’s projects continued growth. The financial, insurance, information, communication, accommodation and restaurant sectors have experienced the fastest growth in the first quarter. According to the AfDB, Tanzania is expected to grow at a rate of 5.6% in 2023. The growth projection is attributed to expected improvements in tourism, the reopening of trade corridors, and the accelerated rollout of vaccines.

Over the past three months, we have observed the following patterns concerning restructuring and insolvency in Tanzania:

  • The Administrator General requested the Law Reform Commission (the Commission) to conduct a review of the legal framework that governs insolvency in Mainland Tanzania. The Terms of Reference mandated the Commission to examine the following aspects in particular:
    • the various pieces of legislation that deal with insolvency, which may be dispersed;
    • the regulatory authorities whose jurisdiction may overlap;
    • the legislation that may no longer be relevant;
    • the issues related to insolvency that may occur across borders; and
    • to compile a report and a draft bill concerning the legal framework that governs insolvency.
  • The Commission drafted a Bill on the Insolvency Act of 2019 (the Bill), but as of now, the Bill has not been enacted into law, and the insolvency system in Tanzania remains fragmented across various legislations.
  • The Tanzania Investment Centre (TIC) has witnessed a rise in the number of registered projects, as the Government has conveyed an encouraging signal to investors who are selecting Tanzania as their preferred investment hub. Furthermore, the Tanzania Investment Act 2022, which has replaced the Tanzania Investment Act No. 26 of 1997, has been implemented as a new law.
  • In the month of March 2023, four deals (4) were notified at the Fair Competition Commission (FCC) with a total deal value of USD 88.02 million in the energy, manufacturing, oil & gas and mining sector.

Companies facing financial difficulties have been leaving the market through mergers and acquisitions, particularly in the financial sector. For instance, on January 27, 2023, the shareholders of Letshego Holdings Limited, which is headquartered in Gaborone, Botswana, issued a public notice of their intention to simplify their operations in Tanzania by merging their two wholly owned subsidiaries in Tanzania. In this process, Letshego Bank Tanzania Limited will acquire Letshego Tanzania Limited T/A Fadika, thereby increasing the potential for commercial and operational efficiency and sustainable business returns.

  • We have observed a significant decline in the number of companies closing due to financial difficulties. A number of companies have resumed or plan to resume operations in Tanzania such as Uber and Petra (a diamond mining company). Some companies have also announced plans to expand operations in Tanzania. For example, Titan Lithium Inc, a US-based company, announced plans to expand its Tanzania operations after the discovery of lithium deposits. Also, in April 2023, the Government of Tanzania concluded framework agreements with three Australian companies, Evolution Energy Minerals, EcoGraf Ltd and Peak Rare Earths to mine graphite and rare earths.


The first quarter of 2023, although relatively stable from an economic standpoint, has seen the Bank of Mauritius (BOM) introduce its new Monetary Policy Framework (MPF), effective as from January 2023. The view from the BOM is that failure to undertake bold reforms immediately, through the introduction of the new MPF, would prove more painful for the population in the long term.

With inflation having been the root cause of economic hardship during 2022, leaving it unaddressed going forward would likely lead to highly volatile and destabilizing price pressures, having a severe long-term impact on the purchasing power of individuals, the labour market and ultimately, economic growth. Bringing inflation under control in the medium term is, therefore, a priority for the BOM, in line with its price stability mandate. With this in mind, the BOM decided to:

  • raise the key repo rate by 50 basis points to 4.50% per annum as from December 2022 to help close yield differentials with other countries, contain foreign exchange volatility and inflation pressures, whilst not undermining growth; and importantly
  • take a fresh look at its repertoire of policy instruments and incorporate unconventional instruments as well as to deal with emergency exceptional scenarios. The new framework is expected to address the deficiencies of the existing one and to help to further strengthen monetary policy operations and the monetary policy transmission mechanism.


The BOM plans to adopt an explicit inflation target to help people understand inflationary pressures, assess the success of the BOM, and aid decision-making in financial markets. The target is flexible and ranges from 2 to 5%, with a mid-point of 3.5% over the medium term, allowing the BOM to pursue other objectives like stable output and employment growth.

Corporate Update

On 24 February 2023, the Board of Directors of New Mauritius Hotels Limited (NMH) informed the shareholders and the public in general of the proposed restructuring of its subsidiary, Beachcomber Hospitality Investments Ltd (BHI). BHI is a hospitality property company which was set up as a business venture between NMH and Grit Real Estate Income Group Limited (GRIT), a pan-African impact real estate company, to acquire three resort hotel properties in the 4-star segment owned by NMH.

The restructuring comprises of GRIT exiting its interest in BHI and NMH contributing to BHI its shares in Kingfisher Ltd, which is the holding company of St Anne Resort Limited, which owns a 5-star resort property situated in St Anne, Seychelles and ultimately, allowing BHI to hold a broader asset base to attract investments. Post-restructuring, BHI shall hold an asset base sufficiently large to attract other investors or funders to pursue its vision. BHI will thus become a vehicle which will own an array of yielding assets in the hospitality industry in the 4-star and 5-star hotel segments both in Mauritius and overseas leased to different tenants.

GRIT’s updated strategy does not envisage material increased hospitality sector investment and it has, therefore, expressed its wish to exit its interests in BHI. In furtherance of that exit, the Board has approved a scheme of arrangement to merge GRIT’s wholly owned subsidiary, Leisure Property Northern (Mauritius) Limited, through which it owns its interests in BHI, with and into BHI.


The move by the BOM from a monetary policy perspective is indicative of the absolute priority for the local economy to contain the difficulties arising from rising inflationary pressures, which has eased since the start of 2023, down from 11.8% in January 2023 to 11% in February 2023.   On a positive note, the tourism sector has seen a steady progression in 2022 and operators within the sector, as highlighted by the restructuring of BHI, are positioning themselves to benefit from the much-needed upturn after the pandemic. Indeed, the number of tourist arrivals has increased from 179,780 in 2021 to 997,290 in 2022 with positive spillover effects into the other related sectors, thereby boosting domestic economic activity.


In this section, we highlight some of the key regulatory and corporate developments in the restructuring space around the world. We have collated information on:

    1. Germany
    2. France
    3. Spain
    4. Switzerland
    1. Regulatory updates
    2. Company updates
    3. Case law update
    1. Corporate Updates


  • The liquidity of European Companies continues to be affected by mounting inflationary pressures, rising energy bills, supply chain disruptions and elevated monetary tightening conditions. Across Europe, the corporate bankruptcy rates have increased in the first quarter of 2023 for most countries save for a few countries like Sweden which had a reduction in filings by approximately 100 companies compared to the 2022 filings.
    • Germany
      • Forecasts indicate that bankruptcy will increase in Germany, with the sectors most likely to be affected being the wholesale trade and transport/storage sectors, which are bearing the brunt of fluctuating energy and commodity prices. There are projected to be 16,500 corporate insolvencies in 2023 compared to the 14,578 insolvency filings in 2022. In February 2023, the number of requests for normal business insolvencies increased by 10.8% compared to January 2023.
    • France
      • In France, the highest corporate filings were for small and medium-sized enterprises that accounted for 90% of the filings in France and across Europe. There were 40,000 business filings in 2022 and the forecast is that the insolvencies will rise to 50,000 in 2023. The sectors with the highest number of filings were construction, wholesale and retail trade and accommodation and food service activities.
    • Spain
      • In the first quarter of 2023, the number of corporate bankruptcies in Spain increased to 3,931 companies which is higher than the levels seen in the fourth quarter of 2022 which had 3,235 bankruptcies and the third quarter of 2022 which had 2,652 bankruptcies.
      • Spain has a new restructuring law which allows for the appointment of an expert to assist in negotiations between creditors and to review proposed restructuring plans. The debtor may request the court for the appointment of an expert. Under the new law, the court can decide to approve a restructuring plan even where the parties disagree. The following cases have been considered under the new law:
    • Celsa, Spain’s largest private industrial group, has debts worth approximately USD 3 billion. Its creditors and shareholders have been unable to reach an agreement on the restructuring of the debt. The creditors propose to reduce the debt by USD 1.29 billion allowing creditors to take equity in the company while restructuring the remaining debt. The court has appointed an expert to determine whether the plan is sustainable before it can issue a ruling.
    • Xeldist Congelados, Spain’s frozen food retailer received court approval for its restructuring plan allowing it to receive fresh capital and save jobs which was cited as a success for the new law.
    • Switzerland
      • Credit Suisse Group, has been fully acquired for USD 3.2 billion by UBS Group. The Swiss National Bank has offered USD 108 billion liquidity assistance to UBS and the Swiss government is granting a USD 9 billion guarantee for any potential losses from the assets that UBS is acquiring. The Swiss regulator, FINMA has stated that about 16 billion worth of bonds held by Credit Suisse will become worthless because the deal will trigger a complete write-down of the bonds in order to increase core capital. As of December 2022, the group’s total liabilities amounted to approximately USD 673 billion.


  • Regulatory updates
    • The Energy Bill Relief Scheme that supports businesses by giving discounts on energy and gas rates for non-domestic users, which began on 1 October 2022, came to an end on 31 March 2023. However, to alleviate the burden of high energy costs, the government has introduced a new Energy Bills Discount Scheme which will come into force on 1 April 2023 until 31 March 2024. The scheme will continue to provide energy bill support to businesses, although at a reduced level as compared to the current scheme.
    • On the regulatory front, the Financial Services and Markets Bill 2022-23 proposes changes to the insolvency regime for digital assets. If passed, the Bill would revoke all ‘EU-derived legislation’ in the financial services and markets sector. The changes include the introduction of provisions governing the special administration and restructuring of recognized providers of digital settlement assets. A digital settlement asset is defined as a digital representation of value or rights that can be used to settle payment obligations, be transferred, stored, or traded electronically, and uses technology to support the recording or storage of data.
  • Company updates
    • Registered company insolvencies in March 2023 were 2,457. There were 288 compulsory liquidations in March 2023, which is more than double the number of compulsory liquidations in March 2022. Creditors Voluntary liquidations over March 2023 were 2,011 which is 9% higher than in March 2022.
    • The UK subsidiary of Silicon Valley Bank, a United States bank which was shut down in March 2023, was acquired by HSBC for 1 pound. At the time of the acquisition, SVB UK had loans of approximately USD 6 billion and deposits of USD 7 billion (with the assets and liabilities of the parent company being excluded from the valuation).
  • Case law update

    Mitchell v Al Jaber [2023] EWHC 364 (Ch)

    • In this case, the High Court made a determination on whether directors had a post-liquidation duty not to intermeddle with company assets. The claims, in this case, arose out of transactions which were made between 2008 and 2016 by directors of a company undergoing liquidation. The liquidators claimed that the directors had breached their pre-liquidation and post-liquidation statutory and fiduciary duties.
    • The court determined that directors owed very limited duties following the liquidation of companies. Nevertheless, directors entrusted with the duty of stewardship of the company’s property post-liquidation could be held liable as constructive trustees if they breach their fiduciary duty. The court held that where a director retains a company’s assets post-liquidation, they hold the property in a fiduciary capacity, and they may be held liable for the breach.

          Re An Unregistered Company [2023] EWHC 114 (Ch)

    • In this case, the company in question was composed of multiple sub-funds, one of which the respondent in this case had invested in. The sub-fund was set up with the objective of investing in assets in the UK. The applicant in this case sought the indulgence of the court to set aside an order granting permission to wind up the sub-fund.
    • In its determination, the court held that the investor had omitted the fact that the sub-fund was neither a company in itself nor did it have its own legal personality or a registered office. The court held that the company was not capable of recognition as it was merely a compartment of the main company rather than a separate entity from the company. However, the High Court set aside the order granting permission to serve a winding-up petition against the sub-fund and held that the court’s jurisdiction to wind up an overseas company had not been invoked properly.


  • In 2023, the number of corporate bankruptcies has increased within the first two months. In January 2023, 54 corporate bankruptcy petitions were filed whereas in February 2023, 57 petitions were filed. These figures are the highest total ever recorded for a comparable period since 2011. In March 2023, the corporate bankruptcy filings rose to 71, which marks the highest monthly tally since July 2020. The sectors with the highest number of bankruptcies are the financials and healthcare sectors which each have 14 bankruptcy filings. 13 companies filed for bankruptcy in the industrials sector and 8 companies in both the energy and information technology sectors.
    • Corporate Updates
      • A US court has held that Johnson and Johnson cannot use bankruptcy to resolve over 40,000 cancer lawsuits over its baby powder being removed from the market in 2020. Johnson and Johnson had put its special unit, LTL Management under court protection to block juries around the country from hearing lawsuits and handing out damage awards. The company will have to defend all the suits having lost some cases already. In one case, the company was forced to pay over USD 2 billion to one group of victims.
      • The largest corporate bankruptcy filing in February 2023 was by Avaya Inc. a communication equipment company that has assets and liabilities exceeding USD 1 billion.
      • Sorrento Therapeutics Inc (a biopharmaceutical company), NBGHome (home décor and styling essentials company) and Bed Bath and Beyond (home textiles, housewares, and decorative home accessories company) have also subsequently filed for Chapter 11.
      • In March 2023, Signature Bank and Silicon Valley Bank collapsed wiping approximately USD 100 billion in market value from the country’s banking sector.
      • Silvergate Capital (Silvergate)Silvergate, a bank popular with digital currency investors, recently announced that it would be shutting down its operations. Silvergate attracted investments during the crypto boom with its deposit base expanding from USD 1.8 billion to USD 14.3 billion between 2019 and 2021 with 82% of the deposits attributable to digital currency customers. The collapse of Silvergate has highlighted the broader impact that insolvencies and the dynamic cryptocurrency sector can have on the more traditional industries.


  • In our June 2022 edition, we reported that trading in Evergrande shares had been halted. The company has now proposed a restructuring plan for its USD 22.7 billion offshore debt. The proposals include allowing the creditors to swap their holdings into new notes with maturities of 10 – 12 years or convert them into different combinations of new notes of 5 – 9 years and equity-linked instruments. The company’s total liabilities are estimated at USD 300 billion. The company cited that it needs 250 billion yuan (approx. USD 36 billion) to 300 billion yuan (approx. USD 43 billion) for its operations over the next 3 years.
  • A leading trade credit insurer has estimated that China is expected to record 15% more bankruptcies in 2023 due to slow economic growth and the limited impact of monetary and fiscal easing. The key areas for concern in 2023 are the debts owed to China by emerging economies, the restructuring of crypto assets and the ongoing property crises.


We note that some of the cryptocurrency companies have opted to lay off employees to streamline operations and reduce expenses. Some of the significant layoffs announced include:

  • Dapper Labs (Dapper) – Dapper is a blockchain and software development company. On 23 February 2023, Dapper announced it would reduce the full-time staff by 20% as part of an organisational restructuring to increase efficiency and competitiveness. The layoffs could impact approximately 100 employees at the company. This was the second round of layoffs as the company had also laid off 22% of its staff in November 2022.
  • Polygon Labs (Polygon) – Polygon, a crypto technology firm, implemented a workforce reduction of 20% leading to layoffs of approximately 100 personnel.
  • Bittrex Inc. (Bittrex) – Bittrex, a US crypto exchange announced that its restructuring efforts would lead to the layoff of 83 employees which is approximately 30% of the workforce.
  • Luno Pte Ltd (Luno) – Luno, a cryptocurrency exchange laid off 35% of its approximately 900 employees with about 330 employees to be affected by the layoffs.
  • ConsenSys Software Inc. (ConsenSys) – ConsenSys, a leading Ethereum software company announced job cuts that would lead to the loss of 96 jobs which was approximately 11% of the company’s total employees. The company stated that it was part of the plans to reduce operating expenses at the company.
  • Coinbase Global Inc. (Coinbase) – Coinbase, a cryptocurrency exchange platform announced that it would lay off 950 employees which accounts for 20% of its workforce. This was the second round of job cuts as the company had laid off 1,100 people in June 2022. The company still has approximately over 3,000 employees according to its records.

There has been one crypto Chapter 11 filing this year. The cryptocurrency companies that filed for bankruptcy last year are still progressing with the bankruptcy process. We have highlighted below the progress made in those cases:

  • Genesis Global Capital Holdco LLC (Genesis) – Genesis, the holding company for cryptocurrency lending operations, filed for Chapter 11 bankruptcy protection at the start of 2023. Genesis has more than 100,000 creditors and an estimated assets and liabilities value of between USD 1 billion to USD 10 billion. Genesis has two subsidiaries, Genesis Asia Pacific Pte Ltd and Genesis Global Capital which have estimated assets and liabilities of USD 100 million and USD 500 million respectively. The two subsidiaries have also filed bankruptcy petitions and moved for joint administration of the three cases. Digital Currency Group which is an umbrella group for cryptocurrency businesses including Genesis, stated that it owes Genesis USD 526 million due in May 2023 and USD 1.1 billion which is due in June 2032 and would settle these as they fell due.

The following cryptocurrency firms or companies exposed to cryptocurrencies have also recently appeared in the press:

  • CoinFLEX (a cryptocurrency trading platform) CoinFLEX’s, restructuring plan has been approved by a Seychelles court. CoinFLEX has committed to restart trading 24 hours after the publication of the court order. In June 2022, CoinFLEX halted its withdrawal operations and fired employees after suffering a USD 47 million loss. Subsequently, the crypto firm went into a restructuring plan in which it was proposed that the firm’s creditors would receive 65% of the company and its employees would receive 15%.
  • Celsius Network (Celsius) – In our last bulletin, we reported that Celsius had filed for Chapter 11 bankruptcy citing extreme market conditions. On 15 February 2023, Celsius submitted its proposed Chapter 11 restructuring plan to the court. Celsius proposes to create a new publicly traded platform. Creditors with locked assets above a certain threshold will receive a token reflecting the value of their assets which they can hold and acquire dividends or sell on the open market. The other creditors comprising 60-70% of the customer base would receive a one-time distribution in liquid cryptocurrency that would not represent a portion of the amount the customer had deposited. In March, the court approved a settlement plan allowing custody account holders to receive back 72.5% of their crypto. A hearing is set to be held on 17 May 2023 for the approval of the disclosure statement.
  • Core Scientific (Core) Core, one of the largest publicly traded crypto mining companies, has been allowed to settle with Priority Power Management (Core’s exclusive energy manager and consultant). Core will transfer over USD 20 million worth of electrical equipment to Priority Power Management to settle approximately USD 30 million owed. Further, Core’s application for approval of a USD 70 million loan to fund its operation has been approved by the court. The loan will have a 10% per annum interest rate. Core’s share price has been rising steadily since the news of the approvals.
  • BlockFi In our last bulletin, we reported that BlockFi had filed for Chapter 11 bankruptcy. BlockFi has USD 227 million held in a money market mutual fund offered by Silicon Valley Bank, which collapsed this year. BlockFi has indicated that despite the significant holdings in the bank, it still has access to its other investments.