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Pledged Equity Proxy Rights and the Rise of the Board Flip

Borrower beware: in times of distress, your credit documents may give your secured lenders an opportunity to “flip” control of your board

Distress happens, even at companies that once appeared financially solid. When it does, the company, its board (which may be controlled by a sponsor in a public or private equity scenario), and its lenders often enter into restructuring discussions in search of a consensual path forward, typically under the terms of a forbearance agreement.

USA, Company & Commercial, Insolvency & Restructuring, Weil Gotshal & Manges LLP, Bankruptcy, Private equity
Ontario Court rejects reverse vesting order for the first time

In 2015, Justice Wilson-Siegel approved a new form of vesting order, referred to as the "reverse vesting order" (or RVO) as part of the restructuring in Plasco Energy (Re). An RVO is a court order that transfers unwanted assets and liabilities out of a debtor company into a (oftentimes newly incorporated) affiliated company, referred to as "ResidualCo." The debtor company is left holding only the assets and liabilities the purchaser wants to acquire.

Canada, Ontario, Insolvency & Restructuring, Litigation, Gowling WLG, Court of Appeal for Ontario
Supreme Court Resolves Split on U.S. Trustee Fees

Introduction

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, US Congress, Supreme Court of the United States
Recent Ontario Court of Appeal decision provides insight on the recognition of foreign orders

Many describe the United States as Canada's most important trade partner. Cross-border insolvency proceedings between the two jurisdictions are frequent and the recognition by one country's court of the other's bankruptcy orders is an important tool in facilitating the restructuring of companies with operations that spread across North America. A recent decision from the Ontario Court of Appeal (leave to appeal of which was denied by the Supreme Court of Canada) invites us to reflect on the delicate balance between comity for foreign orders and Canada's sovereignty over domestic laws.

Canada, USA, Ontario, Insolvency & Restructuring, Litigation, Gowling WLG, Court of Appeal for Ontario, Ontario Superior Court of Justice
In re Buffets: A Fees-t for the United States Trustee

The holidays came early for the United States Trustee (the “U.S. Trustee”) on November, 3, 2020, when a three-judge panel of the United States Circuit Court for the Fifth Circuit, on direct appeal, reversed the bankruptcy court and upheld the constitutionality of a 2017 increase to quarterly fees payable to the U.S. Trustee in Hobbs v. Buffets LLC (In re Buffets LLC), No. 19-50765, 2020 U.S. App. LEXIS 34866 (5th Cir. Nov. 3, 2020). Although the Fifth Circuit’s opinion addresses a variety of constitutional challenges to the recent increase to U.S.

USA, Insolvency & Restructuring, Litigation, Private Client & Offshore Services, Weil Gotshal & Manges LLP, Trustee, Fifth Circuit
To vest or not to vest: interests in land and the powers of insolvency courts

On June 19, 2019, the Ontario Court of Appeal released its decision in Third Eye Capital Corporation v. Ressources Dianor Inc./Dianor Resources Inc. [1], addressing the following issues:

Canada, Ontario, Capital Markets, Insolvency & Restructuring, Litigation, Gowling WLG
Third time's a charm for Alberta regulator: How the SCC decision in Redwater could change the role of environmental orders in Ontario insolvency proceedings

1. Introduction

Canada, Alberta, Environment & Climate Change, Insolvency & Restructuring, Litigation, Gowling WLG, Bankruptcy and Insolvency Act 1985 (Canada), Supreme Court of Canada, Court of Appeal of Alberta