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Second Liens Beware Delaware Bankruptcy Court Finds De Facto Claim Subordination Under Intercreditor Agreement

Executive Summary

On December 27, 2018, the United States Bankruptcy Court for the District of Delaware issued an opinion in In re La Paloma Generating Co., Case No. 16-12700 (Bankr. D. Del. Dec. 27, 2018) [Docket No. 1274], that should raise substantial concerns for junior secured creditors.

In particular, the La Paloma opinion determined that:

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, United States bankruptcy court
Traps for the unwary – secured creditor obligations under the Wage Earner Protection Program

As we warned in our earlier articles, “Wage Earner Protection Program Act Comes Into Force - Secured Creditors Be Wary” and “Extension of the WEPPA – Further Protection for Employees”, the Wage Earner Protection Program Act (the “WEPPA”) took eff

Canada, Employee Benefits & Pensions, Insolvency & Restructuring, Cassels Brock & Blackwell LLP, Wage, Bankruptcy, Debtor, Accounts receivable, Accounting, Personal property, Secured creditor, Bankruptcy and Insolvency Act 1985 (Canada)
Holiday cheer - Alberta court grants rare extension to unpaid supplier

Unpaid suppliers are generally unsecured in liquidation proceedings. A supplier can elevate its unsecured claim by taking security from the debtor or modifying its supply contract by inserting an effective title retention clause. The supplier may also rely on the BIA unpaid supplier provision to assert a super-priority for the return of its goods.

Canada, Alberta, Insolvency & Restructuring, Litigation, Cassels Brock & Blackwell LLP, Bankruptcy, Debtor, Unsecured debt, Liquidation, Secured creditor, Goldman Sachs