With US Circuit Courts split on the issue of whether bankruptcy courts have the power to release third parties from creditors’ claims without the creditors’ consent, a move known as non-consensual third-party release, the Seventh Circuit recently weighed in the affirmative in In re Airadigm Communications, Inc.1 With the split widening between the circuits on this matter, it seems more likely than ever that the Supreme Court could weigh in on and decide this critical issue to lenders and others.2

In re Adelphia Communications Corp.,1 the United States Bankruptcy Court for the Southern District of New York recently held that neither a creditor’s aggressive litigation tactics resulting in the creditor’s prospective receipt under a proposed plan of special consideration for voting in favor of the plan, which special consideration other members of the same class that voted against the plan would not obtain, nor the creditor’s ownership of claims in several debtors, in a multi-debtor Chapter 11 case, was a sufficient basis for the “draconian sanction” of disallowing such creditor’s votes

HEADLINES

Yesterday, the Board of Governors of the Federal Reserve System (“Board”) and the Federal Deposit Insurance Company (“FDIC”) (together, the “Agencies”) issued feedback and other guidance regarding the resolution plans (or living wills) of 12 global systemically important banks (“GSIBs”). Specifically, the Agencies finalized guidance (Final Guidance) to the eight US GSIBs regarding the firms’ resolution pl

On 4 February 2014, our client, Zlomrex International Finance S.A. (“ZIF”), completed the restructuring of its approximately €118 million senior secured high yield notes due 2014 (the “Existing High Yield Bonds”). ZIF, a company incorporated in France, is a financing vehicle for the Cognor group, one of the largest suppliers (by volume) of scrap metal, the second largest seller of semi‑finished steel products and the fifth largest seller (by volume) of finished steel products in Poland.

Setoff is a doctrine based as much on practical considerations as on equitable ones.

Must creditors holding claims denominated in a foreign currency against a debtor in a US bankruptcy case bear the risk of a postpetition decline in the value of the dollar? In In re Global Power Equipment Group Inc.,1 the Bankruptcy Court for the District of Delaware says yes, holding that, pursuant to section 502(b) of the Bankruptcy Code, a contested claim denominated in foreign currency must be converted into United States currency as of the petition date instead of a later judgment or breach date.

The Conversion Date Dispute

Equitable mootness is a doctrine grounded in equity pursuant to which an appeals court will dismiss an appeal of a bankruptcy order — even if effective relief could conceivably have been granted — because the implementation of such relief (e.g., the reversal of a bankruptcy court order) would be inequitable to third parties. This doctrine may be applied to achieve the necessary finality of bankruptcy orders and decisions that is required to effectuate the successful, expedient reorganization of debtors in bankruptcy.2

So far this year, fewer European and American businesses have encountered financial distress that required either bankruptcy or restructuring procedures than in the same period in 2020. This decline occurred despite the ongoing economic impact of COVID-19.

The first of three compliance deadlines for US regulations requiring resolution-related amendments to qualified financial contracts is January 1, 2019, and delaying compliance until the subsequent deadlines creates additional risk. Compliance programs may not be able to eliminate this risk due to the scope of contracts to be remediated and the staggered compliance period that looks back to the first compliance date.