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In re Weinstein and Mallinckrodt: Implications for Royalty Financings, M&A Earn-Outs, and Other Transactions Involving Future Payment Obligations

Deal structure matters, particularly in bankruptcy. The Third Circuit recently ruled that a creditor’s right to future royalty payments in a non-executory contract could be discharged in the counterparty-debtor’s bankruptcy. The decision highlights the importance of properly structuring M&A, earn-out, and royalty-based transactions to ensure creditors receive the benefit of their bargain — even (or especially) if their counterparty later encounters financial distress.

Background

USA, Insolvency & Restructuring, Litigation, Mintz, Bankruptcy, Creditors' rights, Asset purchase agreement , United States bankruptcy court, Third Circuit
Tma submissions on Australian creditors’ scheme of arrangement consultation

On 2 August 2021, the Treasury released a consultation paper seeking feedback on changes to improve creditors’ schemes of arrangement in Australia (the Consultation Paper). The submissions process has now closed.

Australia, Capital Markets, Insolvency & Restructuring, Herbert Smith Freehills LLP, Moratorium, Debtor in possession, Debt restructuring, Creditors' rights, Australian Securities and Investments Commission
Treasury consults on Australian creditors’ schemes of arrangement reforms

The Treasury has released a consultation paper on changes to improve creditors’ schemes of arrangement in Australia (the Consultation Paper).[1] The main proposal in the Consultation Paper is the consideration of a broad automatic moratorium, available to companies proposing a creditors’ schem

Australia, Insolvency & Restructuring, Herbert Smith Freehills LLP, Coronavirus, Corporations Act 2001 (Australia)