On October 20, 2017, the United States Court of Appeals for the Second Circuit issued a decision which, among other things,[1] affirmed the lower courts’ holding that certain noteholders were not entitled to payment of a make-whole premium. The Second Circuit held that the make-whole premium only was due in the case of an optional redemption, and not in the case of an acceleration brought about by a bankruptcy filing.

On October 20, 2017, the United States Court of Appeals for the Second Circuit issued an important decision regarding the manner in which interest must be calculated to satisfy the cramdown requirements in a chapter 11 case.[1] The Second Circuit sided with Momentive’s senior noteholders and found that “take back” paper issued pursuant to a chapter 11 plan should bear a market rate of interest when the market rate can be ascerta

On October 3, 2017, Bankruptcy Judge Laurie Selber Silverstein of the United States Bankruptcy Court for the District of Delaware issued a decision holding that the Bankruptcy Court had constitutional authority to approve third-party releases in a final order confirming a plan of reorganization.

The Bankruptcy Code limits in many ways the rights of nondebtors under contracts with a debtor in bankruptcy. There are, however, some crucial exceptions, which Congress deemed important for the orderly function of the securities markets. In particular, agreements governing securities repurchase (or repo) transactions involving a financial institution may be terminated and liquidated notwithstanding the bankruptcy filing of the repo seller.

A recent case in New York State Supreme Court, One Williams Street Capital Management LP v. U.S. Education Loan Trust IV, LLC (Sup. Ct. N.Y. Cty. May 15, 2015), affords a useful opportunity to review the applicability and scope of §13-107 of the New York General Obligations Law, which provides that a transfer of a bond “vests in the transferee all claims or demands of the transferrer.” The court observed that §13-107 extends to all claims, whether in contract or in tort, including fraud.

Indentures and other agreements governing complex, multitiered structured debt products will typically contain a series of reserves, the adequacy of whose funding will take precedence over payments to noteholders. While the funding requirements of the reserve accounts will be set forth in the agreement, the formulation of these provisions will leave administrators considerable leeway in determining the cash maintenance levels appropriate for the various accounts. In a recent case, UMB National Association v. Airplanes Limited (S.D.N.Y.

Unlike an opinion, an order of the court is often not from the pen of the judge. Typically, a court order is submitted to the judge after negotiation among the parties. So, when a disagreement arises among the parties regarding the interpretation of the court’s order, how does the judge who signed the order go about resolving the matter? The issue came up not long ago in Outer Harbor Terminal LLC (Bkr. D. Del. May, 5, 2017), in which Judge Laurie Silverstein of the District of  Delaware bankruptcy court was confronted with a dispute over her own final DIP order.

In a recent ruling, Trusa v. Nepo(Del. Ch. April 13, 2017), consistent with prior case law, Vice Chancellor Montgomery-Reeves of the Delaware Chancery Court held that a creditor cannot bring a derivative action against a Delaware limited liability company, even where the company is clearly insolvent. The ruling is interesting, because in the well-known case of North American Catholic Educational Programming Foundation, Inc. v. Gheewalla, 930 A.2d 92 (Del.

In a short decision, In re that Certain Indenture Date as of April 1, 2010 (MN Ct. App. April 3, 2017), the Court of Appeals of Minnesota recently addressed a challenge to the award of trustee fees and legal expenses brought by a municipal bondholder.

Part 1 of this series described the recent decision of the ISDA Americas Determinations Committee to declare that a “failure to pay” had occurred with respect to iHeartCommunications Inc., notwithstanding that the only non-payment had been to a wholly owned subsidiary. The non-payment was orchestrated to avoid a springing lien that would have been triggered had all the notes of a particular issue of iHeartCommunications debt been paid in full. It did not reflect on the creditworthiness of iHeartCommunications.