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.

Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.

Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.

WeWork

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.

Building on emerging trends, 2024 has seen a continued rise in the use of equity-linked debtor-in-possession (DIP) financing in Chapter 11 cases.

Recent examples from WeWork and Enviva illustrate how stakeholders are leveraging this innovative tool to drive broader reorganization strategies and outcomes rather than as a mechanism solely providing interim financing to fund a debtor’s operations during the pendency of its bankruptcy case.

WeWork

On May 31, 2024, the chief judge of the U.S. Bankruptcy Court for the Southern District of New York (SDNY) entered General Order M-634, adopting guidelines for combining the processes for Chapter 11 plan confirmation under Section 1129 of the Bankruptcy Code and disclosure statement approval under Section 1125 of the Bankruptcy Code.

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.

Dispute Resolution analysis: An application by a Russian trustee in bankruptcy has succeeded in striking out some parts of a defence to a claim that a share transfer was a sham or a transaction defrauding creditors. Other parts of the defence were not, however struck out.

Kireeva (as trustee and bankruptcy manager of Bedzhamov) v Zolotova and Basel Properties Limited [2024] EWHC 552 (Ch)

What are the practical implications of this case?

Dispute Resolution analysis: An application by the former administrators of a company for an increase in their remuneration has been dismissed, despite the Court concluding that they had standing to bring the application itself.

Frost and another v The Good Box Co Labs Limited and others [2024] EWHC 422 (Ch)

What are the practical implications of this case?