On April 23, 2019, the United States District Court for the Southern District of New York, in fraudulent transfer litigation arising out of the 2007 leveraged buyout of the Tribune Company,1 ruled on one of the significant issues left unresolved by the US Supreme Court in its Merit Management decision last year.

Intercreditor agreements--contracts that lay out the respective rights, obligations and priorities of different classes of creditors--play an increasingly important role in corporate finance in light of the continued prevalence of complex capital structures involving various levels of debt. When a company encounters financial difficulties, intercreditor agreements become all the more important, as competing classes of creditors seek to maximize their share of the company's limited assets.

On January 17, 2017, in a long-awaited decision in Marblegate Asset Management, LLC v. Education Management Finance Corp.,1 the US Court of Appeals for the Second Circuit held that Section 316 of the Trust Indenture Act ("TIA") does not prohibit an out of court restructuring of corporate bonds so long as an indenture's core payment terms are left intact.

On October 1, 2015, the Public Sector Legal Regime Act (Ley 40/2015, 1 de octubre, de Régimen Jurídico del Sector Público) ("PSLR Act") was passed by the Spanish Parliament. As discussed in more detail below, the PSLR Act introduces, among other things, the following reforms to the Spanish Insolvency Act (Ley 22/2003, de 9 de Julio, Concursal) ("SIA") and to the Spanish Public Sector Contracts Act (Real Decreto Legislativo 3/2011, de 14 de noviembre, por el que se aprueba el texto refundido de la Ley de Contratos del Sector Público) ("SPSC Act"):  

Royal Decree Law 4/2014, intended to promote efficiency in Spanish insolvency proceedings, is officially enacted with some important updates.

The Spanish legislature has finally enacted Royal Decree Law 4/2014 (the March Reform). Now known as Law 17/2014, of 30 September (the Act), the new law implements urgent measures regarding refinancing and restructuring of corporate debt. In addition to formally enacting the March Reform, the Spanish legislature included a few updates that are worth highlighting.

Pre-Insolvency Communication

Luxembourg court decisions allow secured lenders to enforce Gecina share pledge.

A controversial insolvency dispute winding its way through courts in Spain and Luxembourg may reinforce the rights of secured lenders to enforce financial collateral within an insolvency proceeding. While the recent Luxembourg Tribunal decision enforcing a financial collateral pledge for payment default appears to favor the secured lenders, a potentially contradictory decision from the Spanish Commercial Courts throws the issue into uncertain territory.

Market participants welcome a clarification extending equitable subordination exemptions granted Sareb to those subsequently purchasing debt from Sareb.

On November 30, 2013, the Spanish legislator approved a recent amendment to Spanish insolvency law, introduced in March 2013, to clarify that a claim transferred to Spanish “bad bank” Sareb, and subsequently sold by Sareb to a third party, will also be exempt from equitable subordination risk.

Background

On December 5, 2013, Judge Steven Rhodes of the US Bankruptcy Court for the Eastern District of Michigan held that the city of Detroit had satisfied the five expressly delineated eligibility requirements for filing under Chapter 9 of the US Bankruptcy Code¹ and so could proceed with its bankruptcy case.

Proceedings from the Courts’ seminar on the homologation of refinancing agreements clarify some material uncertainties.

Background

The Spanish Congress has approved important amendments into the so-called Spanish scheme of arrangements, to facilitate Spanish company refinancings.