The Supreme Court’s landmark decision in Harrington v. Purdue Pharma L.P. – holding that the Bankruptcy Code does not authorize the release of third-party claims against non-debtors in a reorganization plan without the consent of the affected claimants – will have a lasting impact on mass tort bankruptcy cases and likely nullifies one of the primary benefits of the so-called “Texas Two-Step” strategy: obtaining third-party releases of the debtor entity’s non-debtor affiliates.
On June 27, 2024, the Supreme Court of the United States (“SCOTUS” or the “Court”) released its widely-anticipated decision in Harrington, United States Trustee, Region 2 v. Purdue Pharma L.P.
Deal structure matters, particularly in bankruptcy. The Third Circuit recently ruled that a creditor’s right to future royalty payments in a non-executory contract could be discharged in the counterparty-debtor’s bankruptcy. The decision highlights the importance of properly structuring M&A, earn-out, and royalty-based transactions to ensure creditors receive the benefit of their bargain — even (or especially) if their counterparty later encounters financial distress.
Background
The market is experiencing almost unprecedented levels of liquidity, across public and private debt and equity capital markets. This is staunching restructuring activity, which might otherwise be expected to rise (not least as pandemic-related government support starts to withdraw). There are also many companies still sponsoring defined benefit pension schemes. The statutory and regulatory landscape in this area has evolved significantly in recent months – with new powers for regulators, and new restructuring tools for debtors.
Les opérations de gestion du passif gagnent en popularité dans le monde du financement par emprunt. Lorsque les emprunteurs et les émetteurs de titres de créance éprouvent des difficultés à honorer les obligations liées à leurs facilités de crédit, à leurs obligations d’épargne ou à d’autres titres de créance, ils ont recours à des opérations de gestion du passif pour restructurer leurs engagements afin d’obtenir des liquidités supplémentaires sans avoir à obtenir le consentement unanime de leurs créanciers actuels.
While securitisations offer numerous benefits, there are a number of important points for originators to consider to facilitate entering into a securitisation transaction and to avoid prolonged legal work further down the line. In this article, we briefly discuss essential points that originators should be aware of and discuss with prospective lenders or arrangers prior to structuring a securitisation.
A Hong Kong court has refused to sanction a scheme of arrangement, saying that practitioners should explain the key terms and effect of any proposed restructuring in a way which can be easily understood by the creditors and the court.
In Re Sino Oiland Gas Holdings Ltd [2024] HKCFI 1135, the Honourable Madam Justice Linda Chan refused to sanction a scheme of arrangement, saying that creditors had been given insufficient information about the restructuring and the scheme that would enable them to make an informed decision at the scheme meeting.
The Hong Kong Court of Appeal has finally laid to rest the vexed issue of whether an arbitration agreement or a winding-up petition should take precedence in an insolvency situation. In two parallel decisions, the Court of Appeal ruled that an arbitration agreement should be treated in the same way as an exclusive jurisdiction clause and that the principle should be given a wide interpretation.
On April 16, 2024, Canada’s Deputy Prime Minister and Minister of Finance, Chrystia Freeland, delivered the Liberal Government’s federal budget, Fairness for Every Generation (Budget 2024). The most notable tax measure in Budget 2024 is the proposal to increase the capital gains inclusion rate from one-half to two-thirds, for capital gains realized on or after June 25, 2024. This measure will apply to all capital gains realized by corporations and trusts, but only will apply to individuals in respect of the portion of capital gains realized in the year that exceeds $250,000.
In early February, a Delaware bankruptcy judge set new precedent by granting a creditors’ committee derivative standing to pursue breach of fiduciary duty claims against a Delaware LLC’s members and officers. At least three prior Delaware Bankruptcy Court decisions had held that creditors were barred from pursuing such derivative claims by operation of Delaware state law, specifically under the Delaware Limited Liability Company Act (the “DLLCA”).