After nearly three years of study and 16 public field hearings, a commission established by the American Bankruptcy Institute (the “ABI Commission”) to study the reform of chapter 11 of the Bankruptcy Code issued its Final Report and Recommendations on December 8, 2014 (the “Report”). The ABI Commission comprises nearly 130 corporate restructuring authorities serving on 13 advisory committees.

For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current global developments.

Global—On August 29, 2014, the International Capital MarketAssociation (“ICMA”), a group of banks and investors,announced a proposal designed to reduce the ability of holdoutbondholders to undermine sovereign debt restructurings. The plan was created after meetings convened by the U.S. Treasury Department in the aftermath of Greece’s debt restructuring and came on the heels of Argentina’s second default on its sovereign debt in 13 years.

Protections added to the Bankruptcy Code in 1988 that give some intellectual property (“IP”) licensees the right to continued use of licensed property notwithstanding rejection of the underlying license agreement do not expressly apply to trademark licenses. As a consequence, a trademark licensee faces a great deal of uncertainty concerning its ability to continue using a licensed trademark if the licensor files for bankruptcy.

The composition of the Top 10 List of public bankruptcy filings for 2014 indicates that the U.S. has largely left behind the fraud, excess, abuse, and improvidence that dominated the bankruptcy landscape during the 2007–08 financial crisis and the ensuing Great Recession. Continuing a trend that began in 2012, only a single representative from the banking and financial services industry made the cut.

Argentina—The long-running dispute over the payment of Argentina’s sovereign debt has been particularly active in recent weeks and months.

Events Leading Up to Argentina's Default

Compared to much of the rest of the world, the United States had the most positive economic, business, and financial news in 2014.

In December 2013, the U.S. Court of Appeals for the Second Circuit held as a matter of first impression in Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), 737 F.3d 238 (2d Cir. 2013), that section 109(a) of the Bankruptcy Code, which requires a debtor "under this title" to have a domicile, a place of business, or property in the U.S., applies in cases under chapter 15 of the Bankruptcy Code.

Debt-for-equity swaps and debt exchanges are common features of out-of-court as well as chapter 11 restructurings. For publicly traded securities, out-of-court restructurings in the form of "exchange offers" or "tender offers" are, absent an exemption, subject to the rules governing an issuance of new securities under the Securities Exchange Act of 1933 (the "SEA") as well as the SEA tender offer rules.

For the benefit of our clients and friends investing in European distressed opportunities, our European Network is sharing some current developments.

Recent Developments