When a portfolio company underperforms, a sponsor may consider various options to address the perceived performance issues, including changes to a portfolio company’s management team, cost structure, capital structure or other parameters, depending on the nature of the issue(s) at hand. When changes in capital structure may be desirable, often in the context of excessive debt and related liquidity issues, a sponsor’s choices may include a consensual workout outside of bankruptcy, or a court-supervised restructuring under Chapter 11 of the U.S.

The U.S. Supreme Court held that a secured creditor in a chapter 7 bankruptcy case is protected from having its lien “stripped off” even if the collateral securing its claim is worth less than the claims asserted by a senior secured creditor; i.e.the junior creditor’s secured claim is completely "out of the money.” The June 1, 2015 decision, Bank of America, N.A. v. Caulkett, reaffirmed the Court’s prior holding in Dewsnup v.

On May 26, the U.S. Supreme Court held that, so long as parties knowingly and voluntarily consent, a bankruptcy court can issue final orders on matters that it otherwise would not have the constitutional authority to decide. In Wellness Int’l Network v. Sharif,¹ a highly anticipated decision, the majority of the Supreme Court delivered a pragmatic opinion that quelled fears stemming from the Court’s 2011 decision in Stern v.

A recent decision in the Bankruptcy Court for the Southern District of New York (the “Court”) in the Lehman case has extended the unenforceability of ipso facto clauses to a provision triggered by the bankruptcy filing of an affiliate of a contractual party.

Introduction