A receiver can be an important tool when dealing with a troubled loan or asset.
Value is the central feature of any real estate restructuring, whether you are a debtor in need of cash, a creditor looking to recover collateral or an equity holder considering an additional investment.
Chapter 15 of the Bankruptcy Code permits a foreign representative of a foreign insolvency proceeding to seek a bankruptcy court’s assistance in an ancillary proceeding upon recognition of the foreign proceeding. Upon recognition, Chapter 15 empowers a bankruptcy court to grant broad relief to a foreign representative to protect the assets of the debtor or the interests of its creditors in the United States.
Credit bidding of debt held by a secured creditor at a sale of collateral under section 363 of the Bankruptcy Code has become commonplace.1 Does a secured creditor have that same ability in a sale under a chapter 11 plan? Most thought so, but according to the Third Circuit Court of Appeals, not always.
Japanese mobile phone service operator Willcom has filed for bankruptcy protection after failing to reach agreement with creditors on the restructuring of the company’s US $2.3 billion debt load. Filed late last week under Japan’s corporate rehabilitation law, the petition ranks as the largest bankruptcy to affect a Japanese telecom carrier. It is expected to wipe out the investment of the Carlyle Group, the U.S.-based private equity firm that, in 2004, paid US $330 million for a 60% controlling stake in what was then the mobile phone unit of KDDI Corp.
Overcoming months of delay, regional local exchange carrier Fairpoint Communications filed a reorganization plan with a New York bankruptcy court that would reduce the carrier’s debt load by two-thirds and give secured creditors an ownership stake of 92% in the post-bankruptcy entity. At the same time, Fairpoint reached settlements with the states of New Hampshire and Vermont that address commitments to service quality and to the provision of broadband services in those states.
On January 15, 2010, in In re Reliant Energy Channelview LP, the Third Circuit Court of Appeals affirmed the decision of the U.S. Bankruptcy Court for the District of Delaware denying payment of a $15 million break-up fee to the initial bidder of a power plant in conjunction with the debtor’s Section 363 bankruptcy asset sale. The Court based its ruling on the fact that it did not consider the fee necessary to preserve the value of the bankruptcy estate.
In a matter of first impression arising in the largest corporate bankruptcy in history, In re Lehman Brothers Holdings Inc., the Bankruptcy Court for the Southern District of New York invalidated a common contractual provision shifting payment priority upon the default of a swap counterparty (“Flip Clause”) in a credit-linked debt structure.1
Two decisions (one only weeks ago) have held that the scope of Bankruptcy Rule 2019 encompasses “informal committees” of bondholders and that such committees must comply with the extensive disclosure requirements of Bankruptcy Rule 2019.1 In a recent decision, Bankruptcy Judge Christopher Sontchi of the Delaware Bankruptcy Court came out the other way, ruling that such a committee was not a “committee representing more than one creditor” and, consequently, is not subject to Rule 2019.2 In so doing, Judge Sontchi considered but declined to follow the two decisions addressing the same issue:
Elaborating on its Resorts decision of ten years ago concerning payments to shareholders in a public leveraged buyout,1 the Court of Appeals for the Third Circuit recently ruled in In re Plassein Int’l, Corp.2 that the “settlement payment” exemption of section 546(e) of the Bankruptcy Code also insulates selling shareholders in a private LBO from fraudulent transfer liability.