The Bottom Line:
The Bottom Line:
While many amendments to bond indentures can be made without consent from all bondholders, “non-impairment” clauses provide that the indenture may not be amended or restructured in any way that will affect or impair a bondholder’s right to receive principal and interest when due without unanimous consent.
Overview
In Highland Capital Mgmt. v. Dondero (In re Highland Capital Mgmt.), Case No. 21-03007-sgj (Bankr. N.D. Tex. 2021), the U.S. Bankruptcy Court for the Northern District of Texas held that a debtor could not be compelled to abide by an arbitration clause in an agreement that was rejected pursuant to Section 365 of the Bankruptcy Code.
Background
The Bottom Line
Recently, in In re Dura Automotive Systems, No. 19-12378 (Bankr. D. Del. June 9, 2020), the Bankruptcy Court for the District of Delaware held that granting the Official Committee of Unsecured Creditors (the Committee) derivative standing on behalf of the debtors – a Delaware limited liability company – was precluded by the Delaware Limited Liability Company Act (the Delaware LLC Act).
What Happened?
Introduction
In February 2018, the U.S. Supreme Court issued an opinion that, at first blush, appeared to severely curtail the scope of the transferee protections provided by Section 546(e) of the Bankruptcy Code, the “safe harbor” provision that shields specified types of payments from a bankruptcy trustee’s avoidance powers, including transfers “made by or to (or for the benefit of)” a “financial institution” in connection with a “securities contract.” A recent decision from the Second Circuit breathes fresh life into the defense.
The Bottom Line
In yet another of the many cases against Residential Mortgage Backed Securities (RMBS) trustees for their alleged responsibility for losses suffered by investors, Judge Jesse Furman of the Southern District of New York precluded inquiry into the conduct of the trustee where a bankruptcy plan intervened. The plaintiffs were caught in a bind. Alleging misfeasance by the trustee prior to the commencement of the bankruptcy case would have been barred by the statute of limitations. Allegations of misfeasance subsequent to the commencement of the case were swept away by confirmation of the plan.
The Bottom Line
On October 20, 2017, the U.S. Court of Appeals for the Second Circuit issued a long-awaited decision in In re MPM Silicones, LLC (“Momentive”) holding that, with one important exception, that the plan of reorganization confirmed by the bankruptcy court comports with Chapter 11. Case No. 15-1682 (2d Cir. Oct. 20, 2017).