Judicial comments cast doubt on the ability to compromise US law-governed debt effectively based on Chapter 15 recognition alone.
Insolvency officeholders may need clearance upon appointment to entity in an affected sector.
The forecast for the English scheme and plan looks set fair despite concerns around Brexit turbulence.
The restructuring market’s appetite for Part 26 schemes of arrangement and Part 26A restructuring plans shows no signs of diminishing, with some debtors (Smile Telecoms and ED&F Man) even taking a second bite of the cherry. In this article, we explore recurring themes identified in the market throughout the past 18 months.
Out of the money, out of the room
Debtors and investors have an enhanced choice of restructuring venues as the EU Restructuring Directive is rolled out in Member States
An insolvency moratorium first introduced during the COVID-19 pandemic applies to nearly all Russian legal entities, individuals, and sole entrepreneurs, and bans the commencement of insolvency proceedings against Russian obligors.
It begins with an awkward mouthful. Outside a bankruptcy brief, is “unimpairment” even a word? (No, per Merriam-Webster.) Inside Chapter 11, it’s much more: a trend.
Want to refinance your bonds cheaply? Are you an otherwise sound and solvent business, forced into bankruptcy by a massive fire (PG&E), persistent low commodity pricing (Ultra Petroleum), or a pandemic (Hertz, whose airport rental business was shuttered in 2020 by COVID-19)?
Or would you just prefer to boost your stock value by lowering your coupon?
This is how Tribune ends: not with a bang, but a whimper. The 12-year litigation saga, rooted in the spectacular failure of the media and sports conglomerate’s 2007 leveraged buyout, reached an end in late February with a curt “cert. denied” from the US Supreme Court.
Morgan Lewis was one of the firms that captained the defense for Tribune’s former shareholders. This post notes some lessons that we learned—and relearned.
Lesson One: Section 546(e)’s ‘New’ Safe Harbor
The US Supreme Court tends to hear a couple of bankruptcy cases per term. Most of these cases deal with interpreting provisions of the Bankruptcy Code. However, every few years or so, the Supreme Court decides a constitutional issue in bankruptcy. Some are agita-inducing (Northern Pipeline, Stern), some less so (Katz). The upcoming case is a little more nuanced, but could have major consequences.
Insight
Consider a lender that extends a term loan in the amount of $1 million to an entity debtor. The loan is guaranteed by the debtor’s owner. If both the debtor and the guarantor become subject to bankruptcy cases, it is settled that the lender has a claim of $1 million (ignoring interest and expenses) in each bankruptcy case. However, the lender cannot recover more than $1 million in total in the two cases combined. (Ivanhoe Building & Loan Ass'n of Newark, NJ v. Orr, 295 U.S. 243 (1935).)
Not so long ago US Bankruptcy Judge Robert Drain of the Southern District of New York had his time in the barrel—pilloried in the media for approving releases to members of the Sackler family as part of a bankruptcy plan that would settle global opioid-related claims against Purdue Pharma, a bankruptcy debtor, and affiliated family members and other persons who were not bankruptcy debtors.