Bond indentures and loan agreements often include make-whole provisions to provide protection to lenders and investors in the event of debt repayment prior to maturity. Make-whole provisions work to compensate the investor/lender for any future interest lost when the issuer/borrower repays the note prior to a specific date.
In In re 1141 Realty Owner LLC, et al., No. 18-12341 (SMB), 2019 WL 1270818 (Bankr. S.D.N.Y. March 18, 2019), Bankruptcy Judge Stuart M. Bernstein of the U.S. Bankruptcy Court of the Southern District of New York recently reaffirmed that upon sufficient contractual language, "make whole" prepayment premiums are enforceable under New York law even after loan acceleration. The court emphasized that the language of the contract provided for such a result and that this was an enforceable liquidated damages clause under New York law.
In a recent decision, EMA GARP Fund v. Banro Corporation, No. 18 CIV. 1986 (KPF), 2019 WL 773988 (S.D.N.Y. 21 February 2019), District Judge Katherine Polk Failla of the U.S. District Court for the Southern District of New York enforced a foreign reorganization plan in the United States on the basis of international comity, notwithstanding that no application for recognition and enforcement had been made under Chapter 15 of the U.S. Bankruptcy Code. Banro Corp.
In a unanimous 25 February panel decision, the Second Circuit Court of Appeals held that the trustee liquidating Bernard L. Madoff’s investment firm can claw back billions in Ponzi scheme proceeds from investors who received the proceeds indirectly through non-U.S. “feeder funds” (funds that aggregate investor capital to invest in funds such as Madoff’s).
In a unanimous 25 February panel decision, the Second Circuit Court of Appeals held that the trustee liquidating Bernard L. Madoff's investment firm can claw back billions in Ponzi scheme proceeds from investors who received the proceeds indirectly through non-U.S. "feeder funds" (funds that aggregate investor capital to invest in funds such as Madoff's).
New York Bankruptcy Judge Sean H. Lane determined that the Australian debtors in a Chapter 15 foreign recognition proceeding satisfied the U.S. property requirements of Section 109(a) of the Bankruptcy Code on the basis of attorney retainers and claims against insiders located in the U.S.
The Second Circuit recently issued its decision on an appeal to the Momentive Performance Materials Inc. (“MPM”) bankruptcy case. Amongst other issues, the Court found that when determining the appropriate interest rate in a Chapter 11 cramdown, courts should consider market factors rather than strictly apply the Till formula. The Court’s decision will benefit secured creditors when a market rate is ascertainable, as they will no longer have to accept below-market take-back debt.
Hogan Lovells partners Chris Donoho and Ron Silverman spoke to DebtWire Radio about current issues concerning cross-border restructurings. They addressed the factors that prompt foreign-based companies to avail themselves of the U.S. Bankruptcy Code in lieu of local insolvency proceedings. They also talked about the hurdles that such companies must overcome to secure a U.S. court’s administration of their Chapter 11 cases.
How does U.S. Chapter 11 law differ from other foreign insolvency regimes around the world?
Bond indentures and loan agreements often include make-whole provisions to provide protection to lenders and investors in the event of debt repayment prior to maturity. Make-whole provisions work to compensate the investor/lender for any future interest lost when the issuer/borrower repays the note prior to a specific date.
Tightening trade restrictions and concerns swirling around intellectual property rights are creating new risks for conglomerates faced with financial stress, especially when it comes to selling their assets.
When conglomerates encounter financial difficulties, they often sell assets to raise cash and pay off debts. But governments in the United States and elsewhere have begun to increase scrutiny of sales of assets to foreign entities buyers. Many governments have the power to restrict certain sales of assets on the basis of national interest concerns.