Chapter 15 of the U.S. Bankruptcy Code provides a streamlined process for recognition (a form of comity) of a foreign insolvency proceeding. However, courts are divided as to whether a foreign debtor must satisfy the general definition of “debtor” as that term is used in section 109(a) of the Bankruptcy Code, which requires a debtor seeking bankruptcy relief to reside or have a domicile, a place of business, or property in the United States.
Despite a valuation fight, the Senior Lenders primed by Super Senior Debt in RP1 have had their debt written off in full in RP2 without even being given the opportunity to vote on the latter restructuring plan.
The case emphasizes that it is not enough for junior creditors to send letters to the court objecting to the RP and then expect the court to argue their case for them. In the words of Lord Justice Snowden, “they must stop shouting from the spectators’ seats and step up to the plate”.
Backstop commitments have become commonplace in large corporate bankruptcy cases – they provide certainty to the debtor that it will have the funds needed to satisfy its obligations to creditors under its plan of reorganization and that it will have liquidity to operate post-bankruptcy as the reorganized entity. Backstop commitments are also a way for certain creditors to generate some additional return in the form of commitment fees and expense reimbursements in exchange for their agreement to backstop all or a material portion of a proposed rights offering or other financing arrangement.
Dale G. Higer is an attorney and a long-time Commissioner for the State of Idaho on the Uniform Law Commission. His newest role is Chair of the Commission’s newly-formed Study Committee on Assignments for Benefit of Creditors.
What follows is Mr. Higer’s report on the Commission and on the work of the newly formed Study Committee.
Uniform Law Commission
As a result of Purdue Pharma’s proposed plan of reorganization, and the ongoing opioid epidemic that continues to grip the nation, the debate over non-consensual third-party releases has gone mainstream despite being a popular tool for debtors for decades.
Two recent decisions by U.S. District Courts have rejected attempts to include nonconsensual third party releases in chapter 11 reorganization plans. These rulings suggest third party releases may be facing increasing push back from the courts.
The sun has set. Yes it has.
The $7,500,000 eligibility limit for Subchapter V expired yesterday (March 28, 2022), without action by Congress to extend it.
Actually, the Subchapter V sun was set to set on March 27—but that’s a Sunday. So let’s give the benefit of the doubt and say it expired on Monday, instead.
Either way, the heightened debt limit is gone.
Hopefully, Congress can pass the heightened limit anew, after its expiration. Then, perhaps, we can be in a no-harm, no-foul mode, with no ill-effects to anyone. But that remains to be seen.
Despite recent criticisms of venue selection and cries to limit or curtail various provisions of the Bankruptcy Code, a recent decision from the Bankruptcy Court of the Southern District of New York demonstrates that the bankruptcy courts may continue to broadly interpret the scope of their jurisdictional reach and the powers and authorities granted to them under the Bankruptcy Code. In In re JPA No. 111 Co., Ltd., No. 21-12075 (DSJ) (Bankr. S.D.N.Y. Feb.
A key bankruptcy-related response to the pandemic has ended as the increased debt limits under subchapter V of chapter 11, passed by Congress in the CARES Act, have expired. In an effort to provide bankruptcy relief and access to subchapter V of chapter 11 of the Bankruptcy Code to a greater number of small businesses, Congress raised the debt limit for subchapter V eligibility from the original $2,725,625 million to $7.5 million via the CARES Act, passed in March of 2020.
It begins with an awkward mouthful. Outside a bankruptcy brief, is “unimpairment” even a word? (No, per Merriam-Webster.) Inside Chapter 11, it’s much more: a trend.
Want to refinance your bonds cheaply? Are you an otherwise sound and solvent business, forced into bankruptcy by a massive fire (PG&E), persistent low commodity pricing (Ultra Petroleum), or a pandemic (Hertz, whose airport rental business was shuttered in 2020 by COVID-19)?
Or would you just prefer to boost your stock value by lowering your coupon?