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.

In the matter of the Companies' Creditors Arrangement Act ("CCAA") of SM Group, the Supreme Court of Canada rendered a decision regarding compensation in CCAA proceedings. The court ruled that a creditor's right to pre-post compensation under civil or common law may be stayed by a court pursuant to sections 11 and 11.02 of the CCAA.

Dans l’affaire de la Loi sur les arrangements avec les créanciers des compagnies (« Lacc ») relative à Groupe SM, la Cour suprême du Canada prononce une décision sur la compensation dans le cadre de procédures en vertu de la Lacc.

In the matter of the Companies’ Creditors Arrangement Act (the “CCAA”) of Bloom Lake, the Superior Court of Québec rendered a judgment regarding the expansion of the powers of the monitor in a context where a creditor refused to produce documentation requested by the debtors.

Dans le cadre de l’affaire Bloom Lake relative à la Loi sur les arrangements avec les créanciers des compagnies (la « Lacc »), la Cour supérieure du Québec prononce un jugement au sujet de l'élargissement des pouvoirs du contrôleur dans un contexte où un créancier refusait de produire la documentation demandée par les débitrices.

A three-judge panel of the U.S. Court of Appeals for the Fifth Circuit has voided its previous near explicit declaration that make-whole provisions are always unmatured interest, and therefore subject to disallowance under section 502(b) of the Bankruptcy Code in Ultra Petroleum.

Judge Drain has now issued a long-awaited Order on Remand from the Second Circuit’s decision in Momentive Performance Materials determining the appropriate cramdown interest rate applicable to replacement notes issued by Momentive.

The High Court of Hong Kong refused to allow a Chapter 11 Trustee to disclose a Decision from Hong Kong winding up proceedings in the US bankruptcy court. The US proceedings were commenced to prevent a creditor from taking action following a breach of undertakings given to the Hong Kong court in circumstances where the company had no jurisdictional connection with the US.

Following our previous article, the Court of Appeal dismissed an appeal following the High Court deciding that a moratorium in relation to restructuring proceedings in Azerbaijan could not be extended in breach of the Gibbs rule, allowing two significant creditors to proceed with their claims in the English Courts.

Despite the debtor's contention that his primary residence was in the United States, the Court held that it had jurisdiction to make a Bankruptcy Order following a petition presented by HMRC.

HMRC presented a bankruptcy petition against Robert Stayton on 30 May 2014 who owed approximately £653,640. The matter came before the court on a number of occasions before the final hearing, with judgment being handed down in November 2018.