In a 2-1 opinion, the Second Circuit overruled the district court in Marblegate Asset Management LLC v. Education Management Corp., finding no violation of the Trust Indenture Act (“TIA”) in connection with an out-of-court debt restructuring.
Background
USA, Capital Markets, Insolvency & Restructuring, Litigation, Dechert LLP, Bond (finance), Bankruptcy, Unsecured debt, Injunction, Statutory interpretation, Interest, Debt, Maturity (finance), Dissenting opinion, Debt restructuring, US Congress, Constitutional amendment, Second Circuit
On April 15, 2016, the IRS released a generic legal advice memorandum (GLAM 2016-001) (the “April GLAM”) addressing the impact of so-called “bad boy” guarantees (also known as nonrecourse carve-out guarantees) on the characterization of underlying partnership debt as recourse vs. nonrecourse under Section 752 of the Internal Revenue Code.