Illinois’ municipal distress is severe and we have witnessed the political maneuvers  to address Chicago’s ongoing fiscal dilemma.  In 2013, Chicago Mayor Rahm Emmanuel stoked bankruptcy fears citing the city’s ballooning pension obligations that he estimated could exceed $1.6 billion in 2016.  Pew Charitable Trusts has reported that among the nation’s five largest cities, Chicago has put aside the smallest portion of its looming pensions obligations.  While certain changes have been made to counter the pension funding deficit, including Governor Quinn’s hotly contested

There were nearly a million bankruptcy cases filed by individuals and businesses in 2014.  It is safe to say that only the tiniest fraction of such debtors have any familiarity with the Supreme Court’s decision in Stern v.

Introduction

Say what you will about Detroit’s bankruptcy case, but when it is all said and done, the value for each of its participants most likely lies in the learning experience.   And, experience is sometimes a painful teacher.   One of the many take-aways is a framework for what constitutes a workable or“feasible” plan of adjustment (“Plan” or “Plan of Adjustment”) while recognizing the significant risk of implementation and post bankruptcy performance.

Detroit Highlights

Energy Future Holdings (EFH), f/k/a TXU Corp., an energy company centered in Texas, was taken private in 2007 in the largest leveraged buyout transaction that has ever taken place.  The deal was largely predicated on an anticipated rise in natural gas prices; when prices instead plummeted the company, which had borrowed nearly $40 billion, was left with a massively unbalanced capital structure.  The chapter 11 cases of EFH and its subsid

One month ago, Judge Christopher Klein ruled in the city of Stockton, CA bankruptcy case that public employee pension obligations can be impaired in municipal bankruptcy cases under Chapter 9 of the Bankruptcy Code.  Last week, however, Judge Klein approved the plan of adjustment for Stockton that left public pension obligations intact over the vociferous objection of Franklin Investments, a major city bondholder whose claim was substantially reduced.  The confirmation of the Stockton plan underscores that even as there now appears to be a sound legal foundatio

The perception that public employee pension obligations cannot be impaired in bankruptcy suffered a damaging blow several months ago in the City of Detroit bankruptcy case, and has now been fatally wounded by 

General Motors LLC (“New GM”) came into being in the summer of 2009, when it acquired substantially all of the assets of General Motors Corporation (“Old GM”) in a sale undertaken pursuant to section 363 of the Bankruptcy Code.  The July 2009 Sale Order approved by U.S.

Three years ago, in Stern v.

Judge Jed S. Rakoff of the Southern District of New York last week ruled that the U.S. Bankruptcy Code does not permit a bankruptcy trustee to recover foreign transfers.  Specifically, Judge Rakoff refused to allow Irving Picard, the trustee of Bernard L. Madoff Investment Securities LLC (“BLMIS”), to recoup monies initially transferred from BLMIS to non-U.S.