Court holds that distributions made pursuant to priority payment provisions contained in CDO transactions are protected by Section 560 of the Bankruptcy Code

In Parts 1, 2 and 3 we covered some easy traps to fall into when trying to execute a distressed financing tr

Section 546(e) of the bankruptcy code bars state law constructive fraudulent conveyance claims asserted by creditors seeking to augment recoveries from a bankruptcy estate

Earlier today, the Second Circuit Court of Appeals issued a decision in In re Tribune Company Fraudulent Transfer Litigation, No. 13-3992-cv, holding that the Bankruptcy Code’s safe harbor of Section 546(e) (the Safe Harbor) prohibits clawback claims brought by creditors under state fraudulent transfer laws to the same extent that it prohibits such claims when brought by a debtor.

In the US distressed market, liability management has emerged as an effective and widely accepted tool to increase liquidity, restructure debts and extend a borrower’s runway to help it avoid insolvency. However, although not unheard of, it is yet to achieve the same prevalence in Europe, where documents are still catching up to the level of flexibility seen in the US, and different capital structures and legal regimes raise different issues.

Summary of recommended changes to the Bankruptcy Code from the ABI Commission to Study the Reform of Chapter 11

Summary of recommended changes

This chart summarizes the Recommendations in the Commission’s Report that relate to or would have an impact on creditors’ rights.

Background

On July 23, 2015, in an action arising from the huge TCEH chapter 11 bankruptcy, Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York issued an opinion in Delaware Trust Company v.

On February 19, 2013, the six-person Review Team appointed by Michigan’s Governor to conduct a detailed financial review of the City of Detroit delivered its report to the Governor. The Report

As a result of the Review Team’s conclusion, the Governor is required to take action under Michigan’s emergency financial manager law by no later than March 21, 2013.  

The following flow chart summarizes the next steps to be taken in the financial review process of the City of Detroit.  

Reports of Twinkie the Kid’s death have been exaggerated.  Despite widespread mainstream media reports of Hostess’ impending liquidation, the court has not yet approved liquidation.  To the contrary, on November 19, 2012, after a brief hearing on Hostess’s emergency motions to begin the wind down of its operations, Hostess and its two main unions agreed to attend a confidential mediation session.  At the mediation, Bankruptcy Judge Robert Drain intends to determine if the parties can avoid liquidation.

On August, 15, 2012, Bankruptcy Judge Sean H. Lane of the Southern District of New York denied American’s motion to reject its collective bargaining agreement with the Allied Pilots Association (“APA”) on narrow grounds. The Court held that American had not demonstrated that its proposals to eliminate contractual restrictions on pilot furloughs and enter into essentially unlimited codesharing arrangements were necessary to its reorganization.

The recent bankruptcy case of Hostess has centered on Hostess’s attempts to reject collective bargaining agreements with its unions.  Hostess has emphasized that realigning labor costs is essential to its ability to successfully reorganize.  Section 1113 of the Bankruptcy Code sets forth detailed requirements that a debtor must meet to modify or reject CBAs.  Bankruptcy courts’ ultimate decision to authorize rejection of a CBA frequently turns on a detailed examination of the evidence presented in support of the rejection motion.