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ASHINC or Swim Case Study: Lessons for Private Equity Sponsors on Distressed Portfolio Company Risks (Part I: Sponsor Breach of Company Loan Agreement)

In an opinion that mostly flew under the radar in 2021, Judge Christopher Sontchi from the Bankruptcy Court for the District of Delaware (the “Court”) found a private equity sponsor (the “Sponsor”)1 liable (and, in some cases, not liable) under various contractual and tort theories in connection with actions the Sponsor took or did not take in its failed efforts to stave off a potential bankruptcy filing of its portfolio company, Allied Systems Holdings, Inc., now known as ASHINC Corporation (“Allied” or the “Company

USA, Company & Commercial, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Private equity, Fourth Amendment
One Year of German StaRUG - Lessons Learned With Respect To The Tested and Yet Untested

One year ago when the German out-of-court restructuring regime, StaRUG, came into force, people hoped for it to be the beginning of a new viable rescue culture in Germany.

Whilst generally not public, it appears there have been substantially more professional articles covering StaRUG than cases themselves (believed to be around 10-20 for the year).

USA, Banking, Insolvency & Restructuring, Weil Gotshal & Manges LLP, Articles of association
The Bar Date Notice: Two Recent Cases Show Us There May Be More (Yes, More!) To Learn When It Comes to Providing Notice of a Debtor’s Bar Date

Overview

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Cybersecurity
Fireworks in the Sky but not in Court: Bankruptcy Judge Takes a Practical Approach to the Ordinary Course of Business Defense

A recent decision applied the ordinary course of business defense to a preferential transfer claim where the parties had engaged in only two transactions. In re Reagor Dykes Motors, LP, Case No. 18-50214, Adv. No. 20-05031, 2022 LEXIS 70 (Bankr. N.D. Tex. Jan. 11, 2022). The court took a practical approach to the defense, given the absence of a detailed history of invoicing and payments between the parties.

USA, Insolvency & Restructuring, Litigation, Patterson Belknap Webb & Tyler LLP
Arbitrate? You Can’t Make Me! Rejection Trumps Arbitration, Says Texas Bankruptcy Court

Overview

USA, Arbitration & ADR, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Federal Arbitration Act 1926 (USA)
Going, Going, Gone: Third Circuit Confirms Auction Outcome Can Be Strong Evidence of Fair Value

Going, going, gone. Most people might associate those words with fine art, not bankruptcy. But in In re 388 Route 22 Readington Holdings, LLC, the question arose: is value reflected by an active, non-collusive auction, while not dispositive, strong evidence of fair value under section 363(b) of the Bankruptcy Code?

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP
In Vacating Purdue Pharma’s Confirmation Order, the District Court Determines that the Plan’s Nonconsensual Third-Party Releases Are Not Statutorily Authorized

We’ve written extensively here, here, and

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, United States bankruptcy court
Clearing a Runway to Litigating Claims: The Principle of Comity and Pre-Litigation Discovery in Chapter 15 Cases

As cross-border restructurings proliferate, especially in the wake of the global COVID-19 pandemic, companies with global assets and operations may utilize chapter 15 of the U.S. Bankruptcy Code (the “Bankruptcy Code”) to facilitate cooperation between U.S. and foreign bankruptcy courts and protect assets located in the U.S. One doctrine central to relief under chapter 15 is the principle of comity, which refers to the recognition one nation’s legal system accords to another nation’s judicial proceedings. In chapter 15 proceedings, U.S.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, Bankruptcy, Coronavirus
Creditors Barred from Asserting $53 Million Claim: A Look at the Excusable Neglect Standard

Another case shows the perils of waiting until the final minutes to meet a court deadline. In re U-Haul, 21-bk-20140, 2021 Bankr LEXIS 3373 (Bankr. S.D. W. Va. Dec. 10, 2021).

The debtor is a well-known truck rental company. Years before the debtor filed for bankruptcy, a class action lawsuit was filed against it. The suit alleged the debtor had improperly charged certain environmental fees and sought damages totaling $53 million.

USA, Insolvency & Restructuring, Litigation, Patterson Belknap Webb & Tyler LLP
The Third Circuit Lets the Katz Out of the Bag: No Sovereign Immunity for California in the Post-Confirmation Venoco Dispute

The Executive Summary provided a short version of the facts. The next few paragraphs provide a longer version, or you can skip to the next section.

USA, Insolvency & Restructuring, Litigation, Weil Gotshal & Manges LLP, European Commission, Supreme Court of the United States