Recently, in a split (2-1) decision, the United States Court of Appeals for the Second Circuit overturned the United States District Court for the Southern District of New York’s decision in Marblegate Asset Management, LLC v. Education Management Finance Corp., 111 F. Supp.3d 542 (S.D.N.Y. 2015) (“Marblegate II”). The Second Circuit held in Marblegate Asset Management, LLC v. Education Management Finance Corp., No. 15-2124, 2017 U.S. App. LEXIS 782 (2d Cir. Jan.

Second Circuit’s reversal of controversial restructuring decision may boost confidence among distressed bond issuers.

With the reauthorization of the Higher Education Act (HEA) in full swing, the time is ripe for Congress to reconsider current laws prohibiting postsecondary institutions that declare bankruptcy from participating in the federal financial aid programs. Chapter 11, in particular, is a critical tool for institutions in distress, and may be needed now more than ever.

Second Circuit’s reversal of controversial restructuring decision may boost confidence among distressed bond issuers.