On April 22, 2013, Judge Kevin J. Carey of the Bankruptcy Court for the District of Delaware allowed a lender’s $23.7 million pre-petition make-whole claim, representing approximately 37% of the outstanding principal of the loan, in the Chapter 11 case of School Specialty, Inc. ¹ In a decision that will win cheers from the lending community, the court enforced the clear terms of the loan agreement over the objection of the Official Unsecured Creditors’ Committee, holding that the make-whole claim was enforceable under New York law.

BACKGROUND

On January 31, 2013, the Bankruptcy Court for the District of Delaware confirmed the debtors’ proposed plan of reorganization in In re Indianapolis Downs, LLC,¹ declining to “designate” or disallow the votes of several substantial creditors that had entered into a plan support or “lockup” agreement with the debtors after the bankruptcy filing. In a written decision,² the Bankruptcy Court provided important guidance concerning the permissibility of post-petition plan support agreements entered into before the court approves a disclosure statement.

In Ben Hur, Judah Ben-Hur’s team of white horses beat Messala’s black horses in the climactic chariot race. In a similar battle to the death in In re Indianapolis Downs, LLC, the white horses won again when Delaware Bankruptcy Judge Brendan L. Shannon confirmed Indianapolis Downs’ joint Chapter 11 plan of liquidation (the “Plan”) over a series of hard-fought objections focusing on the implications of a Restructuring Support Agreement and the propriety of third-party releases.

On January 17, 2013, in a lengthy and closely reasoned opinion,¹ Judge Sean Lane of the Bankruptcy Court for the Southern District of New York authorized American Airlines, Inc. (“American”) to repay $1.3 billion in debt without payment of a make-whole premium over the objection of U.S.

Last week the United States Bankruptcy Court for the Southern District of New York approved debtor-American Airlines’ motion to enter into a secured financing transaction and repay certain pre-petition aircraft financing without paying make-whole premiums. The indenture trustee sought to ground the motion by asserting that the make-whole had to be paid, but it was the indenture trustee, not American, that crashed and burned.

Last week, the Bankruptcy Court for the Northern District of Texas granted involuntary bankruptcy petitions against ten US subsidiaries of Mexican glassmaker Vitro S.A.B. de C.V. (the “New Debtor Subsidiaries” and “Vitro”, respectively). The ruling is a win in the multi-paned litigation involving certain petitioning noteholders (the “Noteholders”) in their fight against Vitro’s efforts to effect a non-consensual restructuring of their debt through a Mexican insolvency proceeding.

A third court confirms that settlement payments are still settlement payments and early redemptions of notes prior to maturity are exempted from preference actions.

Yesterday (September 12, 2012) the Bankruptcy Court for the Southern District of Texas provided an excellent lesson on the need to know what sauce is going into the stew that governs privileged communications in bankruptcy proceedings.[1]

In the case of In re Santa Ysabel Resort and Casino, the Bankruptcy Court for the Southern District of California heard arguments on September 4, 2012, as to whether the alleged debtor, a tribal casino, was eligible for bankruptcy protection. The court concluded the casino was not an eligible debtor under the Bankruptcy Code.

Whether you are a John Donne, Ernest Hemingway or Metallica fan, the above clause rings a bell. Last week the Court of Appeal for Western Australia joined those “Riding the Lighting” and provided its own musings on “For Whom the Bells Tolls” down under. Rather than affirming that the bell tolls for the infamous Spanish guerrilla fighters or a tortured metaphysical poet, the Australian court provided a new answer: The Bell [decision] tolls for “would be” secured lenders.