The U.S. Bankruptcy Court for the District of New Jersey recently held that a Cayman Islands collateralized-debt obligation issuer (“CDO”) could be a debtor under Chapter 11 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) and declined to dismiss an involuntary case commenced against the CDO by certain noteholders on the grounds that the notes held by such noteholders were “non-recourse” notes. Below is a discussion of the court’s decision and its potential implications. The decision is currently being appealed.
Cayman Islands, USA, New Jersey, Insolvency & Restructuring, Litigation, Private Client & Offshore Services, Schulte Roth & Zabel LLP, Bankruptcy, Debtor, Collateral (finance), Debt, Asset-backed security, Liquidation, Default (finance), Collateralized debt obligation, Mortgage-backed security, Pro rata, Title 11 of the US Code, United States bankruptcy court, US District Court for District of New Jersey