Filing an involuntary bankruptcy petition is an alternative not often considered by creditors. However, faced with the possibility of having to write-off a claim, a creditor may choose to file an involuntary bankruptcy petition in order to put the debtor under the control of the Bankruptcy Code and the bankruptcy court. Such a move comes with risk, and a recent Eleventh Circuit Court of Appeals decision may expand that risk.
Events are happening quickly these days with Caesars Entertainment. On January 13, holders of second lien notes issued by Caesars Entertainment Operating Company (“CEOC”) filed an involuntary chapter 11 petition against CEOC in the U.S. Bankruptcy Court for the District of Delaware. Two days later, CEOC itself filed a voluntary chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of Illinois, setting up a venue fight over the bankruptcy case. And later that same day, the U.S.
Introduction
Put your lender’s hat on. Wouldn’t it be great if you could prevent your borrower from filing bankruptcy in the first place? Unfortunately for lenders, a recent decision demonstrates how hard it is to prevent bankruptcy filings.
On December 1, 2014, the U.S. House of Representatives passed the Financial Institution Bankruptcy Act of 2014(FIBA). The legislation passed on a voice vote and is supported by the major Wall Street banks.
All bankruptcy practitioners know that a debtor may choose which contracts to assume and which contracts to reject. But may a debtor reject contracts that are part of an overall, integrated transaction? In a recent bankruptcy decision, the court found the answer to be no, at least if the parties are careful in drafting their contracts.
- Debt capitalisation in court-approved refinancing agreements
The 4th additional provision (4th a.p.) of the Spanish Insolvency Act (IA) provides that certain effects under a court-sanctioned refinancing agreement may extend to financial creditors that either have not signed the agreement or have expressed disagreement with it (dissenting creditors).
- RDA (RDL, its Spanish acronym) 11/2014, of 5 September, on urgent measures in insolvency matters, amends, inter alia, the rules on majorities required for the acceptance of settlement proposals.
The new rules can be found in art. 124(1) of the Spanish Insolvency Act (Ley Concursal), which now reads as follows:
- El RDL 11/2014, de 5 de septiembre, de medidas urgentes en materia concursal, ha venido a modificar, entre otros extremos, el régimen de las mayorías necesarias para la aceptación de propuestas de convenio.
El corazón de la nueva disciplina está constituido por el nuevo apartado 1 del art. 124 LC, que ha quedado redactado como sigue:
According to its Explanatory Notes, RD Act (Order in Council) 4/2014, of 7 March, adopting urgent measures on business debt refinancing and restructuring, aims to facilitate the financial repair and recovery of companies facing an economic crisis. To this end, a set of rules varying in scope and significance have been laid down, which I here discuss with regards to the treatment reserved to loans granted under refinancing agreements - as provided by the Spanish Insolvency Act (IA) - and their signatory creditors.