When should debt be recharacterized as equity? The answer to this question will have an enormous impact upon expected recovery in bankruptcy since equity does not begin to get paid until all prior classes of claims are paid in full. In a recent unpublished opinion, the Fourth Circuit Court of Appeals provided some guidance on when and in what circumstances recharacterization is appropriate. The Court’s decision also serves as warning to purchasers of debt that they may not be able to hide behind the original debt transaction in a recharacterization fight.

This is a follow-up to our previous client update on Swiber Holdings Limited written on 29 July 2016. To view our previous update, please click here.

Counterparties of Swiber Holdings Limited ("Swiber") and its group companies would do well to keep a close tab on any debts outstanding from the group.

Swiber, an SGX-listed company in the oil fields services sector, issued an announcement in the early hours of Thursday 28 July 2016 stating that it filed an application in the Singapore High Court for a voluntary winding up on Wednesday afternoon, together with an application to place the company under provisional liquidation.

The Jevic Holding Corp. bankruptcy case is proving to be precedent setting.  In a prior post, we examined how the court had greatly increased the evidentiary burden on a party seeking to hold one company liable for the debts of another company under a “single employer” theory.  That ruling was seen as a boon for private equity firms who were oftentimes the target of Chapter 11 creditor

On 27 May 2016, South Korea's STX Offshore & Shipbuilding Co. ("STX OS"), once the country's fourth-largest shipbuilding firm by revenue, filed for court-supervised rehabilitation, in the Seoul Central District Court.

Overview

The IMF, in a January 2016 update to its World Economic Outlook, revised its global growth projections for 2016 and 2017 down by 0.2%, citing a decline in emerging markets' growth and lower prices for energy and other commodities.^[1]

With the trough in the global economy set to continue, there is unlikely to be any respite for the marine and trade industries, where counterparty insolvency will become more prevalent. 

When can a bank be at risk of unknowingly receiving a fraudulent transfer? How much information does a bank need to have before it is on “inquiry notice”? A recent decision from the Seventh Circuit Court of Appeals highlights the risks that a bank takes when it ignores red flags and fails to investigate. This decision should be required reading for all lenders since, in the matter before the Seventh Circuit, the banks’ failure to investigate their borrower’s questionable activity caused the banks to lose their security and have their secured loans reduced to unsecured claims.

Did Trump win again? Yes, but this time it was not “The Donald” but was instead the casino operator Trump Entertainment Resorts, Inc.

Did Trump win again?  Yes, but this time it was not “The Donald” but was instead the casino-operator Trump Entertainment Resorts, Inc. (“Trump Entertainment”).

When can a bank be at risk of unknowingly receiving a fraudulent transfer?  How much information does a bank need to have before it is on “inquiry notice”?  A recent decision from the Seventh Circuit Court of Appeals highlights the risks that a bank takes when it ignores red flags and fails to investigate.

In re Sentinel Management Group – The Decision