At the time of this writing, it’s not exactly another day in paradise, over 103,000 Americans are no longer with us, there are an estimated 1,500,000 confirmed U.S. cases of the coronavirus, and I am also ballparking at 40,000,000+ unemployment claims filed at the time of this writing, because just two weeks ago it was at 36,500,000. Obviously, it’s not hard to see and hear more gloom and doom in the news about the plummeting economy in the U.S.
Leveraged loans continue to be a topic of interest in the current environment, particularly when they are pooled and securitized as collateralized loan obligations. A recent decision sheds light on whether and when leveraged loans and similar instruments may be classified as securities and, therefore, be subject to securities laws.
Permanent Reforms
Moratorium: a new stand-alone moratorium to provide businesses with an initial 20-business-day stay from creditor action.
May Restructuring Activity
May 4 – OneWeb Global Ltd., which filed for Chapter 11 bankruptcy protection in the United States in March, received multiple initial letters of interest from potential purchasers. Final binding bids are due June 26, along with a deposit equal to 10% of bid value, and an auction is scheduled for July 2.
The bankruptcy trustee of a bank holding company was not entitled to a consolidated corporate tax refund when a bank subsidiary had incurred losses generating the refund, held the U.S. Court of Appeals for the Tenth Circuit on May 26, 2020. Rodriguez v. FDIC (In re United Western Bancorp, Inc.), 2020 WL 2702425(10th Cir May 26, 2020). On remand from the U.S. Supreme Court, the Tenth Circuit, as directed, applied “Colorado law to resolve” the question of “who owns the federal tax refund.” Id., at *2.
Goulston & Storrs bankruptcy attorney Doug Rosner recently collaborated with Thomson Reuters to create a three-part video series regarding alternative solutions to the financial problems of distressed companies. This summary highlights the key elements to a successful out-of-court restructuring (part two of the series).
Directors and Officers (“D&O”) liability policies, like many other liability policies, often have an exclusion that precludes coverage when one insured sues another insured. Coverage, however, can be restored under certain exceptions. One of those exceptions is the bankruptcy exception, which allows a bankruptcy trustee or comparable authority to sue on behalf of the estate against another insured like a director or officer.
- With tenant closures and lease defaults on the rise in the wake of the economic downturn caused by the COVID-19 pandemic, tenant bankruptcy filings are a major concern for landlords across the real estate industry.
- As courts of equity, bankruptcy courts not only consider the specific facts and circumstances of each case but also, because of the overriding goal of reorganization in bankruptcy, may subordinate other legal rights and policies.
The United States Supreme Court opted not to hear a dispute regarding broad third party releases contained in a plan of reorganization which releases were held by lower courts to be binding on nonconsenting creditors. In the Third Circuit bankruptcy case of Millenium Lab Holdings II LLC, the bankruptcy court approved a plan containing such releases, a decision upheld on appeal by the District Court in Delaware and thereafter by the Third Circuit Court of Appeals. The Third Circuit's decision was largely based on its interpretation of the Supreme Court's decision in Stern v.