The First Circuit Court of Appeals has recently held in Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, No. 12-2312 (July 24, 2013), a case of first impression at the Circuit Court level, that a private equity fund that exercises sufficient control over a portfolio company may be considered a “trade or business” for purposes of Title IV of the Employee Retirement Income Security Act of 1974 (ERISA).
The absolute priority rule ordinarily prevents a Chapter 11 debtor from distributing any money or property to junior creditors and old equity investors unless all senior creditors have first been paid in full. See 11 U.S.C. § 1129(b)(2)(B)(ii). Nevertheless, old equity investors may attempt to receive new equity in the reorganized debtor in consideration for providing new (post-bankruptcy) investments in the debtor.
The UK's bank regulatory and insolvency law structures were unprepared for the global financial crisis. As a result, the UK government's response to intense bank stress in the immediate aftermath of the crunch led to a number of somewhat unsatisfactory ad hoc solutions ranging from nationalisations to encouraging otherwise healthy institutions to take over weaker banks. Generally speaking, there was a criticism, fairly made perhaps, that profits were privatised and losses had been socialised.
Fundamental restructuring of insolvent companies—in any sector— is a fight for survival.
Given the global nature of the industry, it is perhaps no surprise that shipping companies and their advisors have sought appropriate court protection to alleviate creditor pressure and a possible break-up of the business where a consensual restructuring is not possible.
The EU Court of Justice held that Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 (“Directive 2008/94”) applies to pension benefits under a supplementary pension scheme, regardless of the cause of the employer’s insolvency, and without taking into account state pension benefits. Directive 2008/94 provides that member states must protect the pension interests of retirees when an employer becomes insolvent.
The U.S. Supreme Court recently denied a petition for writ of certiorari by United Healthcare Insurance Company (“UHC”), which had requested judicial review of a ruling by the U.S. Court of Appeals for the Fifth Circuit, whose jurisdiction includes the State of Texas. The Fifth Circuit’s opinion had held that ERISA did not preempt state claims brought by Access Mediquip (“Access”), a medical device provider, against UHC for negligent misrepresentation, promissory estoppel, and violations of the Texas Insurance Code (see Access Mediquip L.L.C. v. UnitedHealthcare Insurance Co., No.
Bankruptcy Code § 1129(a)(10) provides that in order for a plan proponent to “cram down” - i.e., force acceptance of - a plan of reorganization on a dissenting class of creditors, at least one impaired class of creditors must vote in favor of the plan. Because a plan is often not accepted by all classes entitled to vote, the ability to procure at least one impaired, accepting class in order to cram down a dissenting class is essential in achieving plan confirmation.
On January 31, 2013, the Bankruptcy Court for the District of Delaware in In re Indianapolis Downs, LLC1 declined to designate the votes of parties to a post-petition restructuring support agreement (i.e., a lock-up agreement), instead confirming the Debtors’ Modified Second Amended Joint Plan of Reorganization (the “Plan”) based on the votes of such parties.
The U.S. Department of Labor’s Employee Benefits Security Administration announced a proposed rule that would expand its Abandoned Plan Program to include individual account plans, including 401(k) plans, of companies in Chapter 7 bankruptcy (a “Chapter 7 Plan”). Under the current rule, only large financial institutions and other asset custodians can serve as administrators of abandoned plans, and a plan is considered abandoned only after no contributions or distributions have been made for at least 12 months.
On November 28, 2012, the United States Court of Appeals for the Fifth Circuit published an opinion affirming the bankruptcy court’s ruling that the Mexican Plan of Reorganization (the “Concurso Plan”) of the Mexican glass-manufacturing company, Vitro, S.A.B.