Four years ago, in Stern v. Marshall, the Supreme Court stunned many observers by re-visiting separation of powers issues regarding the jurisdiction of the United States bankruptcy courts that most legal scholars had viewed as long settled. Stern significantly reduced the authority of bankruptcy courts, and bankruptcy judges and practitioners both have since been grappling with the ramifications of that decision.

The Delaware Court of Chancery recently issued an opinion in Quadrant Structured Products Company¹that addresses creditors’ rights to bring derivative lawsuits against directors and officers of a corporation.  The Court held that Delaware law does not impose a continuous insolvency requirement and that the “traditional balance sheet test” is the appropriate test for determining solvency.  The opinion also provides a roadmap on the current landscape under Delaware law for analyzing breach of fiduciary duty claims. 

The senior secured note holders recently lost their appeal of the bankruptcy court's decision confirming Momentive's chapter 11 plan.¹

Originally published in ABF Journal on May 20, 2015

Determining secured lender cramdown interest rates in Chapter 11 cases has been widely debated, and recent court rulings have proven to be inconclusive. Kaye Scholer Attorneys Madlyn Gleich Primoff and Holly Martin discuss the controversial issue, highlighting the ABI Commission’s recent recommendations that endorse a more favorable approach for secured lenders.

Why Lawyers Need to Pay More Attention to the Distinctions Between Veil-Piercing and Alter-Ego Theories

Judge Robert Gerber ruled last week that General Motors LLC (“New GM”), the entity formed in 2009 to acquire the assets of General Motors Corporation (“Old GM”), is shielded from a substantial portion of the lawsuits based on ignition switch defects in cars manufactured prior to New GM’s acquisition of the assets of Old GM in 2009.

Two recent decisions of the US District Court for the Southern District of New York may complicate future debt exchange offers. The cases address the validity, under the Trust Indenture Act of 1939, as amended (the Act), of indenture amendments that delete substantive covenant protections in the context of out-of-court debt restructurings. Such amendments are a common feature of debt exchange and cash tender offers and are often essential to achieve a restructuring outside of bankruptcy court.

With the near-historic drop in oil prices, distressed investors are evaluating a myriad of investment opportunities in the oil industry and related fields. One particular area of focus when analyzing these energy-related opportunities are the master limited partnerships that many energy companies utilize in their corporate structure.

Drop in Oil Prices

Judge Christopher Sontchi issued a notable opinion last week in the bankruptcy case of Energy Future Holdings Corp., et al. (“EFH”), Case No. 14-10979 (D. Del.), ruling that the repayment in full of certain senior secured notes did not trigger an obligation by the debtors to pay a make-whole premium.

Judge Robert Gerber will be stepping down at the end of this year, ending a storied judicial career highlighted by his oversight of the 2009 chapter 11 case of General Motors Corporation (“Old GM”).