Historically, investment grade debt with a make-whole provision was fairly straightforward. At any time during the life of the instrument, the issuer had the right to redeem the debt. But the price to be paid included the discounted value of the remaining payments of principal and interest over the life of the debt. Because the cost of paying the “make-whole” is often significant, issuers seldom redeem bonds when they are required to pay the make-whole price.

On May 4, 2015, the Supreme Court of the United States issued an opinion regarding a Chapter 13 bankruptcy case from the United States Court of Appeals for the First Circuit (the “First Circuit”).1 The question on appeal was whether debtor Louis Bullard (“Bullard”) could immediately appeal the bankruptcy court’s order denying confirmation of his proposed Chapter 13 payment plan (the “Plan”).2 The Court held that denial of confirmation of a debtor’s plan is not a final, appealable order.3  

Case Background

© 2015 Hunton & Williams LLP 1 May 2015 Oak Rock Financial District Court Addresses the Applicable Legal Standard for True Participation Agreements The United States District Court for the Eastern District of New York recently applied two tests, the True Participation Test and the Disguised Loan Test, to determine whether agreements were true participation agreements or disguised loans.1 In addition, the District Court noted that the most important question in such a determination is the risk of loss allocation in the transaction, and that if an alleged participant is not subject to the

In Quadrant Structured Products Company, Ltd. v. Vertin, the Delaware Court of Chancery made two key rulings concerning the rights of creditors to bring derivative lawsuits against corporate directors.¹  First,  the court held that there is no continuous insolvency requirement during the pendency of the lawsuit.

In two recent cases, the United States District Court for the Southern District of New York has indicated that Section 316(b) of Trust Indenture Act of 19391 (the “TIA”) requires unanimous consent for out-of- court restructurings that impair bondholders’ practical ability to receive payments, even if the bondholders’ technical, legal ability to receive payments remains intact.

While it is common practice in Canada to seek certain emergency orders on an ex parte basis (i.e. where only one party (and not the adversary) appears before a judge), applicants for such orders are held to a high standard of candour with the court.

Many secured creditors see their position in absolute terms. They rely on their general security and aggressively assert their priority over unsecured creditors, such as trade creditors. However, a recent decision of the Ontario Court of Appeal(306440 Ontario Ltd. v. 782127 Ontario Ltd. (Alrange Container Services), 2014 ONCA 548) demonstrates that creative arguments by trade creditors may allow them to take priority over even secured creditors in certain circumstances, by using trust principles to remove assets from the estate.

The United States Court of Appeals for the Fifth Circuit recently entered an order confirming that when a fraudulent transfer defendant is able to establish a defense pursuant to 11 U.S.C.

On November 5, 2014, the United States Bankruptcy Court for the Western District of Virginia issued a noteworthy opinion that runs counter to what many Virginia law practitioners assume to be the common law in Virginia – i.e., that a manager of a Virginia limited liability company owes a fiduciary duty of loyalty to the limited liability company.

The United States District Court for the District of Delaware recently entered a Memorandum Opinion (the “District Court Opinion”) concerning the constitutional sufficiency of the publication of the bar date notice in the New Century bankruptcy as it applies to unknown creditors.1 The District Court vacated the Bankruptcy Court’s August 30, 2013,order (the “Constructive Notice Order”), which had approved the constitutional sufficiency of notice to unknown creditors by publication in The Wall Street Journal and the Orange County Register.