In a November 17, 2016 ruling likely to impact ongoing debt restructurings, pending bankruptcy proceedings and negotiations of new debt issuances, the Third Circuit recently overturned refusals by both the Delaware bankruptcy court and district court to enforce “make-whole” payments from Energy Futures Holding Company LLC and EFIH Finance Inc. (collectively, “EFIH”) to rule that the relevant indenture provisions supported the payments. The case was remanded to the bankruptcy court for further proceedings.

Die aus Sicht der deutschen Volks- wirtschaft erhebliche Kapitalanlage- tätigkeit von Versicherungsunterneh- men (VU) unterliegt den aufsichts- rechtlichen Vorgaben des Versiche- rungsaufsichtsgesetzes (VAG). Im Hinblick auf die Vorgaben der euro- päischen Solvency II-Richtlinie haben sich mit Inkrafttreten des neuen VAG zum 1. Januar 2016 (VAG n.F.) Ände- rungen der Anforderungen an die Kapitalanlage von VU ergeben. Dies gibt Anlass, einen Blick auf die wichtigsten Neuerungen zu werfen.

A.   Bisherige Rechtslage

The economically significant investment activity by insurance companies is subject to the regulatory requirements of the German Insurance Supervision Act (Versiche­ rungsaufsichtsgesetz – VAG). With regard to the provisions of the European Solvency II Directive, changes to the requirements for capital investments of insurance companies have resulted from the new VAG which came into effect as of 01 January 2016 (VAG new). This gives us cause to take a look at the most important changes.

A.  Former legal situation

On May 15, 2012, the United States Court of Appeals for the Eleventh Circuit issued a decision^[1]  in the much-watched litigation involving the residential construction company, TOUSA, Inc. ("TOUSA"). The decision reversed the prior decision of the District Court, ^[2] reinstating the ruling of the Bankruptcy Court.^[3]

Background

Indentures often contain make-whole premiums payable upon early redemption of the debt, and term B loan agreements often include "soft call" protection in the form of prepayment premiums during the early life of the loan. If the debt issuer becomes subject to a chapter 11 proceeding after the debt issuance, the question then arises as to how this payment obligation is to be treated: Does the make-whole or prepayment premium constitute unmatured interest due as a result of the debt acceleration, which would be disallowed, or is it liquidated damages?