Securities Alert February 1, 2016 E&P Restructurings: Focus on Uptiering Transactions By: Jennifer Wisinski, Paul Amiel, Bill Nelson and Kristina Trauger Times are tough, very tough, for many mid-cap and small-cap exploration and production (“E&P”) companies. Crude oil prices have fallen from more than $100/barrel in July 2014 to a twelve-year low of less than $30/barrel in January 2016. Natural gas prices are at a three-year low. The growing consensus is that depressed prices will experience a slow recovery that may continue into the 2020s.

The Insolvency Law Reform Bill 2015 has been introduced into Parliament as part of the Australian Government's strategy to modernise and strengthen the nation's insolvency and corporate reorganisation framework.

Freezing orders and the Foreign Judgments Act

Freezing orders (also known as Mareva orders or Mareva injunctions) are oft-used tools available to a plaintiff to preserve the assets of a defendant, where there is a danger of the defendant absconding or of the assets being removed from the jurisdiction or otherwise diminished. Such dangers put in peril the ability of a plaintiff to recover any favourable judgment against that defendant.

Introduction

The Full Court of the Federal Court has given some important guidance on the calculation of remuneration for court appointed receivers.  In its decision in Templeton v Australian Securities and Investment Commission the Court has highlighted the importance of proportionality in determining reasonable remuneration.

General Position

Sophisticated real estate lenders spend significant amounts of time and energy attempting to insulate themselves from potential bankruptcy filings by their borrowers. A primary reason, which many an experienced real estate lender has found out the hard way, is the risk that a debtor in bankruptcy may “cram down” a plan of reorganization over its lender’s objection. Under a typical cramdown plan, a debtor may stretch out payments to its secured creditor for several years and attempt to replace its negotiated interest rate with a new, below- market rate of interest.

1. On 11 March 2015, the High Court delivered its decision in Fortress Credit & Anor v Fletcher & Ors [2015] HCA 10.
2. The appellant was Fortress Credit.

1. On 11 March 2015 the High Court delivered its decision in Grant Samuel & Ors v Fletcher & Ors [2015] HCA 8.
2. The appellants were Grant Samuel Corporate Finance Pty Limited and JP Morgan Chase Bank.

The Senate has announced a national inquiry into insolvency in the Australian construction industry (Inquiry).^[1] 

A recent decision by a New Jersey bankruptcy court scrambles the law regarding rejected trademark licenses.¹ Crumbs was a multi-location bakery that also licensed its trademarks and trade secrets to third parties. In July of 2014 Crumbs filed a Chapter 11 reorganization case and in August of 2014 the court entered an order selling substantially all of the assets of Crumbs to LFAC² free and clear of liens, claims, encumbrances, and interests.

In a case that should cause lenders heartburn, the United States District Court for the Western District of North Carolina recently ruled that common provisions in a Chapter 11 plan prevented the debtor’s lender from executing on a judgment against the non-debtor owner of the debtor.¹ Biltmore is a corporation² that operates manufactured home parks and sells and rents manufactured homes. McGee is the president and controlling shareholder of Biltmore. Biltmore filed Chapter 11 in January of 2011, and TD Bank was Biltmore’s largest secured creditor.