Mediation has become an invaluable tool in large chapter 11 cases.
Energy Future Holdings (EFH), f/k/a TXU Corp., an energy company centered in Texas, was taken private in 2007 in the largest leveraged buyout transaction that has ever taken place. The deal was largely predicated on an anticipated rise in natural gas prices; when prices instead plummeted the company, which had borrowed nearly $40 billion, was left with a massively unbalanced capital structure. The chapter 11 cases of EFH and its subsid
Second Circuit holds that Bankruptcy Code preempts creditors’ state law constructive fraud claims.
A recent decision by the U.S. Court of Appeals for the Second Circuit, In re Tribune Company Fraudulent Conveyance Litigation,1 represents a significant victory for shareholders who may get cashed out in connection with a leveraged transaction that precedes a company bankruptcy.
Introduction
European Leveraged Finance Alert Series: Issue 6
Legislative changes in Italy (starting from 2012) facilitated leveraged transactions facilitating security in both bank and bond financings and aligning bond and bank finance options. These changes have catalyzed creditors’ appetite for Italian leveraged finance transactions and helped fuel a resurgence in M&A activity in Italy. Here are ten (plus one) things to consider when doing a leveraged finance deal in Italy:
In light of recent reports released to the market, a lender in the leveraged loan market would be forgiven for indulging in some cautious optimism. New-issuance in July aggregated to €9.5 billion - a 13-month high. The year-to-date leveraged buy-out volume of €10 billion (38 deals) compares favourably with the €2.2 billion of volume (13 deals) for the same period in 2009. Against this backdrop, however, lenders should consider the recently released statistics from the Insolvency Service, and other economic data, which suggest that the economic outlook remains uncertain.
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.
A recent decision from the Southern District of New York may reopen a door — which many had believed was all but closed — for disgruntled creditors seeking to challenge failed leveraged buyouts (“LBOs”) as fraudulent conveyances. In In re Lyondell Chemical Co., 2016 WL 4030937 (S.D.N.Y. July 27, 2016), District Judge Denise Cote reinstated an intentional fraudulent conveyance claim seeking to claw back $6.3 billion in distributions made to Lyondell Chemical’s shareholders through an LBO that failed quickly and dramatically.
The Third Circuit recently affirmed that a debtor in Chapter 11 can use a tender offer to settle claims without running afoul of the Bankruptcy Code. Although In re Energy Future Holdings Corp.is limited to its particular facts and circumstances, the decision could lead to increased use of tender offers prior to confirmation of a bankruptcy plan.