On December 27, 2022, the IRS issued two notices providing key initial guidance for the new excise tax on corporate stock buybacks and the new corporate alternative minimum tax (CAMT). Both the excise tax and the CAMT were enacted as part of the Inflation Reduction Act that Congress passed in August 2022.1
We have identified four judgments from 2022 which are significant for those in the private equity sector and may have particular relevance for sponsors, shareholders, management teams and/or appointees to boards. In this overview we summarise the key points and some of the practical implications.
The decisions we address are:
On October 12, the Honorable Robert D. Drain, U.S. Bankruptcy Judge for the Southern District of New York, issued his final decision from the bench in the bankruptcy cases of supermarket chain Tops Holdings II Corporation (“Tops”). The decision came in an adversary proceeding seeking to avoid four dividend payments totaling $375 million from 2009–2013 paid to the Tops’ private equity investors (the “PE Group”) as constructive and actual fraudulent transfers and also hold the director-defendants responsible for breaching their fiduciary duties.
Richard J Cooper, Lisa M Schweitzer, Jessica A Metzger and Richard C Minott, Cleary Gottlieb Steen & Hamilton
This is an extract from the 2023 edition of GRR's the Americas Restructuring Review. The whole publication is available here.
In summary
Elizabeth McColm, Brian Bolin and Grace Hotz, Paul Weiss Rifkind Wharton & Garrison
This is an extract from the 2023 edition of GRR's the Americas Restructuring Review. The whole publication is available here.
In summary
In his final opinion, Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York held that dividends paid from proceeds of safe-harbored transactions under section 546(e) of the Bankruptcy Code are not safe-harbored. While only approximately 15 pages of Judge Drain’s 109-page final opus are dedicated to consideration of the section 546(e) issue, the relevant analysis ends with a pressing question to Congress and an appeal to modify section 546(e) to “restrict to public transactions its currently overly broad free pass . . .
Kon Asimacopoulos and Gabe Harley, Kirkland & Ellis International LLP
This is an extract from the third edition of GRR's The Art of the Ad Hoc. The whole publication is available here.
Introduction
The Bankruptcy Protector
On August 18, 2022, the United States Bankruptcy Court for the Southern District of Indiana, in In re BWGS, LLC, No. 19-01487-JMC-7A, 2022 WL 3568045 (Bankr. S.D. Ind. Aug. 18, 2022), narrowly interpreted the safe harbor provision in section 546(e) of the Bankruptcy Code by refusing to dismiss a lawsuit against a guarantor whose liability was eliminated by the debtor’s payment to the bank that held the guarantee.
Overview on Section 546(e) of the Bankruptcy Code
Hajime Ueno, Masaru Shibahara and Hiroki Nakamura, Nishimura & Asahi
This is an extract from the 2023 edition of GRR's The Asia-Pacific Restructuring Review. The whole publication is available here.
In summary
This article was first published by the Financier World Wide.
Largely due to the worldwide economic turmoil caused by the global coronavirus (COVID-19) pandemic, recent years have seen global business disruption on a grand scale – a scorched corporate landscape ripe for distressed mergers and acquisitions (M&A) practitioners to pick over.
Trends in traditional M&A activity