German legislator finally introduces tax exemption for income resulting from debt waivers in restructuring scenarios with retroactive effect.

Ruling overturns New York decision rejecting market-based approach.

Key Points:

• Court of Appeals for the Second Circuit requires courts to consider efficient market interest rate, if available, for purposes of chapter 11 “cramdown.”

• Second Circuit decision overturns lower court ruling that used “formula approach” to determine appropriate chapter 11 cramdown interest rate.

To date, a debt waiver has been frequently used as a tool to successfully restructure German-based companies in financial difficulties.

Second Circuit’s reversal of controversial restructuring decision may boost confidence among distressed bond issuers.

Bankruptcy Court reinforces importance of parties’ intent in determining the nature of overriding royalty interests under state law.