Fulltext Search
Solvent Debtors: Make-Whole Premiums and Post-Petition Interest

On October 14, 2022, the U.S. Court of Appeals for the Fifth Circuit affirmed the decision of the U.S. Bankruptcy Court for the Southern District of Texas (Isgur, J.) allowing a claim against a solvent debtor for a make-whole premium and post-default interest totaling approximately $387 million. Ultra Petroleum Corp., et al. v.

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, United States bankruptcy court, Fifth Circuit, U.S. Court of Appeals
Supreme Court to Hear Circuit Split Over Bankruptcy Safe Harbor Provision

The Supreme Court has granted certiorari in Merit Management Group L.P. v. FTI Consulting Inc. to resolve a circuit split over the interpretation of Section 546(e) of the Bankruptcy Code, the “safe harbor” provision that shields specified types of payments “made by or to (or for the benefit of)” a financial institution from avoidance on fraudulent transfer grounds.

USA, Banking, Capital Markets, Insolvency & Restructuring, Litigation, Kramer Levin Naftalis & Frankel LLP, Title 11 of the US Code, Eighth Circuit, Supreme Court of the United States, Eleventh Circuit, Sixth Circuit, Seventh Circuit, Tenth Circuit
No Turnover of the Make-whole Amount in the EFH Bankruptcy

In a pair of decisions in 2015, the United States Bankruptcy Court of the District of Delaware determined that neither the first lien notes trustee nor the second lien notes trustee of Energy Future Intermediate Holdings Corp. (“EFIH”), a subsidiary of Energy Future Holdings (“EFH”), was entitled to receive a make-whole on the repayment of the corresponding indebtedness resulting from the acceleration of that debt in the EFH bankruptcy case.

USA, Delaware, Insolvency & Restructuring, Litigation, Kramer Levin Naftalis & Frankel LLP, Bankruptcy, Collateral (finance), Interest, Debt, Liquidation, Title 11 of the US Code, Trustee, United States bankruptcy court, Third Circuit, US District Court for District of Delaware
Seventh Circuit Court of Appeals reverses District Court, follows trend of applying Bankruptcy Code safe harbors literally and expansively

INTRODUCTION

USA, Capital Markets, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Security (finance), Safe harbor (law), Title 11 of the US Code, Seventh Circuit
MtGox seeks protection under chapter 15 of the Bankruptcy Code

In late February 2014, MtGox Co., Ltd (“MtGox”), once the largest bitcoin exchange in the world, suspended all trading on its exchange after internal investigations revealed a loss of approximately 750,000 of its customers’ bitcoins worth nearly $473 million. That loss caused MtGox to become insolvent.

Japan, USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Title 11 of the US Code
Second Circuit interprets securities contract safe harbor broadly for second time in three years

CASE SNAPSHOT

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Security (finance), Safe harbor (law), Second Circuit
Fourth Circuit concludes that certain commissions and margin interest payments are protected from avoidance by "stockbroker defense"

CASE SNAPSHOT

In a case of first impression, the Fourth Circuit determined that broker commissions shown to be reasonable and customary parts of settling stock sales constitute "settlement payments" and that the payment of margin interest constitutes "margin payments" under section 546(e) of the Bankruptcy Code such that these types of payments are immune from avoidance and recovery by a bankruptcy trustee.

FACTUAL AND PROCEDURAL BACKGROUND

USA, Capital Markets, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Interest, Margin (finance), Commission (remuneration), Fourth Circuit
Bankruptcy Court concludes that renewable power purchase and sale agreement is a "forward contract" entitled to safe harbor protections

CASE SNAPSHOT

USA, Insolvency & Restructuring, Reed Smith LLP, Bankruptcy, Debtor, Renewable energy, Title 11 of the US Code, United States bankruptcy court
Distributions from an investment advisor to its customers may not be protected transactions under Section 546(e) of the Bankruptcy Code

CASE SNAPSHOT

USA, Insolvency & Restructuring, Litigation, Reed Smith LLP, Debtor, Security (finance), Safe harbor (law), Commodity, Liquidation, Title 11 of the US Code, United States bankruptcy court
Mechanics for accelerating repo transactions due to an event of default under the GMRA

Under the 2000 version of the Global Master Repurchase Agreement (the "GMRA"), a standard form agreement produced by The Bond Market Association and the International Securities Market Association, an Event of Default occurs, and all outstanding transactions under the GMRA are accelerated immediately, upon:

Global, Insolvency & Restructuring, Reed Smith LLP, Security (finance), Liquidation, Liquidator (law)