In this post, we return to cross-border insolvencies and examine one of the first decisions issued in 2018 by a bankruptcy court in a chapter 15 case: In re Energy Coal S.P.A., No. 15-12048 (LSS), 2018 Bankr. LEXIS 10 (Bankr. D. Del. Jan.
Perhaps this is one of the first articles you’re reading about the debt crisis in Venezuela. It won’t be the last. The situation there is bad and will get worse.
A recent decision of the United States Bankruptcy Court for the Southern District of New York provides important guidance on the limits of nonconsensual third-party releases in the Second Circuit.[1] SunEdison, Inc. sought confirmation of a plan for itself and its affiliated debtors.
It’s been a hard year for cryptocurrency. The values of most cryptocurrencies, including major coins such as Bitcoin and Ethereum, have continued to tumble. In fact, the price of one stablecoin, which is a form of cryptocurrency tied to another currency, commodity or financial instrument, de-pegged from its cryptocurrency token and entered into a downward spiral. Ultimately, the stablecoin and the crypto token it was pegged to collapsed, erasing $18 billion of value with it.
It is a unique characteristic of debt restructuring under Chapter 11 of the Bankruptcy Code that a majority of a class of creditors can accept a modification of the terms of the debts owed to the class members, as provided in a plan of reorganization, and thereby bind non-accepting class members.[1] The ordinary route to confirming a Chapter 11 plan is to obtain its acceptance by a majority of every impaired class of creditors and equity hold
A recent case in the Southern District of New York, U.S. Bank, NA v. T.D. Bank, NA, applied the so-called Rule of Explicitness to the allocation of recoveries among creditors outside of a bankruptcy proceeding. In the bankruptcy context, this rule requires a clear and unambiguous intention to turn over post-petition interest to senior creditors at the expense of junior creditors. The court in this case found the requisite documentary clarity to pay post-petition interest ahead of the distribution of principal.
In January 2017, a divided panel of the United States Court of Appeals for the Second Circuit issued its widely reported opinion in Marblegate Asset Management, LLC vs. Education Management Corp., in which the majority held that the “right ... to receive payment” set forth in Section 316(b) of the Trust Indenture Act of 1939 (TIA) prohibits only nonconsensual amendments to an indenture’s core payment terms and does not protect the practical ability of bondholders to recover payment.
Background
In a recent case arising out of the bankruptcy of the Yellowstone Mountain Club, a private ski club for the ultrawealthy, Blixseth v. Brown (In re Yellowstone Mountain Club, LLC) (9th Cir. Nov. 28, 2016), the Ninth Circuit held that plaintiff needed the bankruptcy court’s permission to bring post-petition claims against the chair of Yellowstone’s Unsecured Creditors Committee (“UCC”).
Section 316(b) of the Trust Indenture Act, which prohibits action that would deprive individual bondholders of the right to receive principal and interest, has taken center stage of late with rulings on the scope of its applicability. But another provision of Section 316 of the TIA drives in the opposite direction, and is equally fundamental to the architecture of indenture debt as commonly issued in this country. Section 316(a)(1) prescribes the default rule that a majority of bondholders have the power to direct the remedial actions of the trustee.