In an Order issued yesterday by the Bankruptcy Court for the Southern District of Texas in the Omega Navigation Enterprises, Inc. (Omega) chapter 11 cases, Judge Karen Brown has denied motions to dismiss or convert Omega’s chapter 11 cases or for relief from stay filed by Omega’s Senior Lenders and supported by Omega’s Junior Lenders and Unsecured Creditors’ Committee. In the view of Lloyd’s List, a leading industry publication:

In an Order issued yesterday by the Bankruptcy Court for the Southern District of Texas in the Omega Navigation Enterprises, Inc. (Omega) chapter 11 cases (the Show Cause Order), Judge Karen Brown has directed Omega’s Senior Lenders, Junior Lenders and Unsecured Creditors’ Committee to show cause whether they should be sanctioned for the conduct described in the Show Cause Order, a copy of which can be found HERE.

After four long years, Australia-based Centro Properties Group (“CNP”) has consummated a global restructuring that combines a debt-for-equity swap with an aggregation of its assets into a new real estate investment trust, Centro Retail Australia (“CRF”). Bracewell & Giuliani was first engaged by Centro’s private placement noteholders in December 2007. As the restructuring progressed Bracewell’s role expanded to becoming lead counsel for CNP’s entire international lending syndicate consisting of more than 90 distressed debt investors, institutional investors and commercial bank

What information does the insolvency administrator have to provide to creditors?

Introduction

The German Federal Court of Justice (Bundesgerichtshof - BGH) in its decision of 17 February 2011 (IX ZR 131/10) has been dealing with the issue which – since the Act to Modernise the Law Governing Private Limited Companies and to Combat Abuses (Gesetz zur Modernisierung des GmbH-Rechts und zur Bekämpfung von Missbrauchen - MoMiG) came into effect – is being controversially discussed as to whether loans by family members (in particular the shareholder’s siblings, spouse and children) in insolvency proceedings will be given subordinate ranking.

The risks facing a lending bank if the borrower becomes insolvent are often twofold. Not only are outstanding repayments in jeopardy, but, in the case of debtor`s insolvency, there is also a risk of voidable preference (Insolvenzanfechtung), where the insolvency administrator may challenge repayments already received and loan collateral granted before the insolvency filing.

On November 17, 2011 the IRS issued final Treasury Regulations (the “Final Regulations”) that address the tax consequences of a debtor partnership’s issuance of equity in satisfaction of a debt obligation (a “Partnership Equity-for-Debt Exchange”). The Final Regulations provide debtor partnerships, their partners and creditors with welcome clarity regarding the federal income tax consequences of such restructuring. 

The enforcement of triangular setoffs in bankruptcy, where affiliates set off their claims against the debtor, received another setback in a recent decision in the Lehman bankruptcy cases. See In re Lehman Brothers Inc., No. 08-01420 (JMP) (SIPA), 2011 WL 4553015 (Bankr. S.D.N.Y. Oct.

Following the Second Circuit’s recent precedent in an Enron appeal (also the subject of a Basis Points blog post), Judge Peck of the United States Bankruptcy Court for the Southern District of New York concluded that the redemption of notes prior to maturity was exempt from preference actions under the safe harbor provision of Bankruptcy Code § 546(e). Official Comm. of Unsecured Creditors of Quebecor World (USA) Inc. v. Am. United Life Ins. Co., No. 08-10152 (Bankr. S.D.N.Y. July 27, 2011).

Argentine debtors are now subject to employee take-over under the nation’s recently amended bankruptcy code, signed into law by the nation’s President, Cristina Fernandez de Kirchner. Argentine Bankruptcy Law 24,522 as amended by Law No. 26,684,1 allows employees of a bankrupt company who have established a union or cooperative to (i) suspend the enforcement of claims that are filed by creditors for up to 2 years and (ii) ask the judge to appoint the cooperative as the successor to the debtor’s management.