Allen & Overy LLP eAlert: Bankruptcy Court Applies 'Public Policy' Exception in Chapter 15 to Bar Non-Debtor Releases: ATTORNEY ADVERTISING

On June 13, 2012, the United States Bankruptcy Court for the Northern District of Texas issued a memorandum decision in a chapter 15 case in which it refused to give effect to non-debtor releases under a Mexican plan of reorganization on the basis that such releases were manifestly contrary to the public policy of the United States. https://www.aohub.com/aoos/viewContent.action?key=Ec8teaJ9VarbAIvLu1NOd17eOOGbnAEFKCLORG72fHz0%2BNbpi2jDfaB8lgiEyY1JAvAvaah9lF3d%0D%0AzoxprWhI6w%3D%3D&nav=FRbANEucS95NMLRN47z%2BeeOgEFCt8EGQTBTrTXtG0BY%3D&uid=YZDfsUx1Czg%3D&popup=HxapDW%2FMKd4%3D&fr
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Texas Bankruptcy Court Denies Recognition to Mexican Financial Restructuring Plan; Decision to be Appealed to the Fifth Circuit

On June 13, the bankruptcy court for the Northern District of Texas in In re Vitro, S.A.B. de C.V. declined to recognize and enforce an order issued by the Federal District Court for Civil and Labor Matters for the State of León, Mexico, which approved Vitro SAB’s reorganization plan in its Mexican insolvency proceeding (known as a concurso mercantil proceeding). The final decision in this case will have a significant effect on the negotiation and implementation of cross-border financings and restructurings, especially those involving Mexican issuers and guarantors of U.S.
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Long-Awaited Foreign Corrupt Practices Act Guidance Issued by DOJ and SEC

On November 14, 2012, the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) published A Resource Guide to the U.S. Foreign Corrupt Practices Act. The comprehensive, 120-page guide emphasizes at the outset that FCPA enforcement remains a priority for U.S. authorities. While non-binding on the government, the guide provides companies with a valuable window into the government’s thinking on the interpretation and enforcement of the FCPA. As the enforcement actions cited in the guide make clear, the stakes in this area are high.
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Market Test Required for Plans Giving Equity to Insiders

In In the Matter of Castleton Plaza, LP,1 the Court of Appeals for the Seventh Circuit held that a new value plan that leaves creditor claims unpaid must be subjected to a market test if the new value is contributed by an insider. The decision by the Seventh Circuit expanded the competition requirement to insiders whether or not the insider is a holder of a claim or interest against the debtor. The Castleton decision could be read to be a substantial expansion of both the requirements of 1129(b)(2)(B) and the Supreme Court decision in Bank of America National Trust & Savings Ass’n v.
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Lock Up Your Creditors - Court Gives Broad Protection to Binding Plan Support Agreements

Rejecting the formalistic approach, the Delaware Bankruptcy Court in Indianapolis Downs, LLC focused on the policies underlying the idea of the disclosure statement to uphold a post-petition lock-up agreement, entered into before approval of a disclosure statement, with sophisticated financial players who had access to the material information that the disclosure statement would have provided.
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