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United States District Court for the Southern District of New York largely dismisses Lehman’s $8.6 billion “slush fund” claims against JPMorgan

FINANCIAL RESTRUCTURING & INSOLVENCY CLIENT PUBLICATION October 14, 2015 United States District Court for the Southern District of New York Largely Dismisses Lehman’s $8.6 Billion “Slush Fund” Claims Against JPMorgan On September 30, 2015, the United States District Court for the Southern District of New York (the “District Court”) denied the motion of Lehman Brothers Holdings Inc.

USA, Insolvency & Restructuring, Litigation, A&O Shearman, JPMorgan Chase, Lehman Brothers
The United States Bankruptcy Court for the Southern District of New York deals loss to Lehman in interpreting loss under ISDA Master Agreement

In a blow to the Lehman Chapter 11 estates, the United States Bankruptcy Court for the Southern District of New York held on September 16, 2015 that Intel Corporation’s Loss calculation resulting from a failed transaction under an ISDA Master Agreement was appropriate.1 The decision is significant both because of the dearth of judicial interpretation of the ISDA mechanics regarding the calculation of early termination amounts, and because it affirms the general market understanding that a non-defaulting party has broad discretion in calculating “Loss,” so long as its

USA, New York, Derivatives, Insolvency & Restructuring, Litigation, A&O Shearman, Fair market value, Intel, Lehman Brothers, United States bankruptcy court
Grant Forest Products v. TD Bank: standard of review for discretionary CCAA decisions

In a proceeding under the Companies’ Creditors Arrangement Act (“CCAA”), a judge has discretionary powers to, among other things, order debtor companies into bankruptcy and thereby resolve priority disputes. What should be the standard of review of such discretionary decisions? Historically, the standard has been high.

Canada, Ontario, Insolvency & Restructuring, Litigation, Osler Hoskin & Harcourt LLP, Standard of review, Court of Appeal for Ontario, Court of Appeal of Alberta
Indalex pension decision considered by Ontario Court of Appeal

Following the Supreme Court of Canada decision in Sun Indalex Finance, LLC v. United Steelworkers, [2013] 1 S.C.R. 271 (Indalex), creditors and their advisors have been closely following jurisprudence which considers the scope of the decision.

Canada, Ontario, Employee Benefits & Pensions, Insolvency & Restructuring, Litigation, Osler Hoskin & Harcourt LLP, Liquidation, Supreme Court of Canada, Court of Appeal for Ontario
US Federal Reserve Board and Federal Deposit Insurance Corporation provide additional guidance for certain resolution plans

On July 28, 2015, the Federal Reserve Board and the FDIC provided guidance to 119 firms that will be filing updated resolution plans in December 2015. These firms include three nonbank financial companies: American International Group, Inc., Prudential Financial, Inc., and General Electric Capital Corporation. Based on a review of the plans submitted in 2014, the agencies have provided direction to each firm with respect to their upcoming resolution plans.

USA, Banking, Insolvency & Restructuring, A&O Shearman, Federal Reserve Board, Federal Deposit Insurance Corporation (USA)
The Second Circuit holds that claims against Lehman Brothers related to bilateral repurchase transactions do not qualify for customer status

On June 29, 2015, the United States Court of Appeals for the Second Circuit affirmed the decision of the United States Bankruptcy Court for the Southern District of New York, which held that claims asserted by counterparties in relation to bilateral repurchase agreements do not qualify for treatment as customer claims under the Securities Investor Protection Act of 1970 (“SIPA”).

USA, Capital Markets, Insolvency & Restructuring, Litigation, A&O Shearman, Security (finance), Lehman Brothers, Second Circuit, United States bankruptcy court
The Supreme Court holds that a Bankruptcy Court’s order denying confirmation of a debtor’s proposed chapter 13 plan is not a “final order” subject to immediate appeal

In a May 4, 2015 opinion1 , the United States Supreme Court held that a bankruptcy court order denying confirmation of a chapter 13 repayment plan is not a final order subject to immediate appeal. The Supreme Court found that, in contrast to an order confirming a plan or dismissing a case, an order denying confirmation of a plan neither alters the status quo nor fixes the rights and obligations of the parties. Although the decision arose in the context of a chapter 13 plan, it should apply with equal force to chapter 11 cases.

USA, Insolvency & Restructuring, Litigation, A&O Shearman, Unsecured debt, Supreme Court of the United States, First Circuit
The Third Circuit Court of Appeals affirms structured dismissal of Chapter 11 case, holding that a structured dismissal can deviate from the Bankruptcy Code’s priority scheme in rare circumstances

On May 21, 2015, the United States Court of Appeals for the Third Circuit affirmed a decision of the United States Bankruptcy Court for the District of Delaware, which had approved the structured dismissal of the Chapter 11 cases of Jevic Holding Corp., et al. The Court of Appeals first held that structured dismissals are not prohibited by the Bankruptcy Code, and then upheld the structured dismissal in the Jevic case, despite the fact that the settlement embodied in the structured dismissal order deviated from the Bankruptcy Code’s priority scheme.

USA, Insolvency & Restructuring, Litigation, A&O Shearman, Leveraged buyout, United States bankruptcy court, Third Circuit, US District Court for District of Delaware
The United States District Court for the Southern District of New York upholds rulings with respect to subordination, cramdown and the make-whole dispute

In a memorandum decision dated May 4, 2015, Judge Vincent L. Briccetti of the United States District Court for the Southern District of New York affirmed the September 2014 decision of Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York, confirming the joint plans of reorganization (the “Plan”) in the Chapter 11 cases of MPM Silicones LLC and its affiliates (“Momentive”). Appeals were taken on three separate parts of Judge Drain’s confirmation decision, each of which ultimately was affirmed by the district court:

USA, New York, Insolvency & Restructuring, Litigation, A&O Shearman
Bank Recovery and Resolution Directive – implications for repo and derivative counterparties

DERIVATIVES/ASSET MANAGEMENT/FINANCIAL INSTITUTIONS ADVISORY & FINANCIAL REGULATORY CLIENT PUBLICATION 12 May 2015 Bank Recovery and Resolution Directive – Implications for Repo and Derivative Counterparties The Bank Recovery and Resolution Directive (BRRD)1 introduces an EU-wide regime for recovery and resolution planning for, and for resolution action to be taken in respect of, banks and large investment firms (typically the large sell-side institutions) (FIs)2.

European Union, USA, Banking, Insolvency & Restructuring, A&O Shearman, Asset management, Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 (USA)