Welcome back to Distressed Debt Legal Insights, Ropes & Gray’s source of timely insights for professionals navigating the complex world of liability management and special situations finance. In this issue we will provide a summary of certain aspects of the noteholder litigation in Wesco that culminated in the recent district court decision approving the 2022 uptier transaction and reversing the bankruptcy court’s decision.
The Original Transaction
In this issue, we spotlight the unfolding litigation between the UCC and Oaktree in TPI Composites’ ongoing bankruptcy, which appears to be headed for a settlement. This case is unusual in that the uptier transformed former equity holders into senior creditors rather than elevating existing lenders.
The Unsecured Creditors Committee Challenge
Welcome back to Distressed Debt Legal Insights, Ropes & Gray’s new source of timely insights for professionals navigating the complex world of liability management. In this edition, we’re looking at how Anthology resolved an objection to its proposed non-pro rata DIP rollup.
Background
Anthology filed for Chapter 11 on Sept. 29 in the Southern District of Texas with a restructuring support agreement signed by 87% of first out lenders and 68% of second out lenders.
On July 31, 2024, the Supreme Court of Canada released its decision in Poonian v. British Columbia (Securities Commission), on whether financial sanctions imposed by securities regulators are dischargeable through bankruptcy. The decision resolves a conflict between Alberta and B.C. jurisprudence and will have a significant impact on the treatment of all administrative orders in bankruptcy proceedings.
The facts
Since the first Johnson & Johnson talc bankruptcy was filed in 2021, Judge Michael Kaplan has faced countless disagreements in the US Bankruptcy Court. These range from discovery fights, disputes over administration of tens of thousands of individual claims and all-out conflict over the total amount in controversy.
Section 192 of the Canada Business Corporations Act (CBCA) provides a flexible tool that allows corporations to achieve important change and undertake various corporate transactions, subject to court approval and oversight. This article aims to provide an update on the Québec courts’ acceptance of virtual securityholder meetings and approach to the solvency requirement.
Overview of the arrangement process
Employee terminations and downsizing are features of most restructurings. While employees can typically assert a claim in the insolvency process, parallel claims and complaints with labour relations regulators and tribunals are relatively common. In a recent judgment, the Superior Court of Québec clarified that all employee claims can be extinguished through a plan of arrangement under the Companies’ Creditors Arrangement Act (CCAA), including those filed before regulators and tribunals.
The U.S. Supreme Court recently issued its latest bankruptcy opinion in MOAC Mall Holdings LLC v. Transform Holdco LLC, holding that the Bankruptcy Code’s rule against invalidating 363 sales after appeal is not an iron-clad jurisdictional bar, but rather a mere statutory limitation.[1]
Just hours after the United States Bankruptcy Court for the District of New Jersey entered an order dismissing the Chapter 11 Case of Johnson & Johnson subsidiary, LTL Management, as a bad faith filing, LTL filed for Chapter 11 protection again in the same Bankruptcy Court.
Delaware Judge Brendan Shannon has joined calls for reforming Section 546(e) of the bankruptcy code, echoing concerns that the section’s safe harbor from fraudulent transfer liability has allowed investors to “loot privately held companies to the detriment of their non-insider creditors with effective impunity.”[1]