The Delaware Bankruptcy Court recently authorized the sale of La Paloma’s electricity-generating assets “free and clear” of any obligations to surrender compliance certificates under California’s Cap-and-Trade Program. The ruling confirms the viability of Bankruptcy Code section 363 sales as a mechanism to release energy-related assets from certain ongoing environmental obligations.
“[T]he Bankruptcy Code does not permit [an undersecured] creditor . . . to advance an unsecured claim for post-[bankruptcy] attorneys’ fees,” held the U.S. District Court for the Eastern District of North Carolina on Nov. 27, 2017. Summitbridge Nat’l Invs. Iii v. Faison, 2017 U.S. Dist. LEXIS 195267, *8 (E.D. N. C. Nov. 27, 2017). Affirming the bankruptcy court, the district court agreed that “the Code is most properly interpreted to allow only oversecured creditors to add post-[bankruptcy] attorneys’ fees.” Id., at *10.
On November 28, 2017, Tidewater Inc. and its affiliated debtors (collectively, the “Tidewater Debtors”) withdrew their motion objecting to final allowance of rejection damage claims of Fifth Third Equipment Finance Company (“Fifth Third”). The notice of withdrawal indicated that Fifth Third, the sole remaining non-settling vessel lessor, resolved its dispute with the Tidewater Debtors pursuant to which Fifth Third’s “Sale Leaseback Claim” was allowed in the amount of $67,500,000.
Introduction – Distressed Issuers and Borrowers
Distressed and special situations investors should take note of the U.S. Bankruptcy Court’s recent decision in Oi’s Chapter 15 case. We present our takeaways for investors.
Fourth Circuit Authorizes Partial Dirt for Debt Plan
The Bankruptcy Code requires that secured creditors realize the indubitable equivalent of their claims as a condition to confirmation of a Chapter 11 plan of reorganization. In the case of Bate Land & Timber LLC, the Fourth Circuit addressed indubitable equivalence in the context of a partial dirt for debt plan where the debtor planned to covey several tracks of real property in partial satisfaction of its obligations to its secured creditor and pay the remaining balance owed in cash.
When the fallout from failed intellectual-property litigation collides with bankruptcy, the complexities may be dizzying enough, but when the emerging practices and imperatives of litigation financing are imposed on those complexities, the situation might be likened to three-dimensional chess. But in the court of one veteran bankruptcy judge, the complexities were penetrated to reveal that elementary errors and oversights can have decisive effects.
Boston Herald, Inc., along with three affiliates and subsidiaries, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Lead Case No. 17-12883). The Herald’s Petition estimates both its assets and liabilities to be between $10 – $50 million.
Numerous changes to the Federal Rules of Bankruptcy Procedure (the “Rules”) take effect on December 1, 2017. The changes significantly impact the administration of consumer bankruptcy cases, and Chapter 13 cases in particular.
Some of the most significant changes to affect creditors, explained in more detail below, include:
It’s no secret that Delaware, New York (Southern District), and Texas (at least since the oil and gas crisis) have become known as the “hotspots” for filing large chapter 11 bankruptcy cases. Whether due to desirable precedent, well qualified judges, the responsiveness of the Courts to the need for prompt scheduling of hearings, or a sense of uniformity, most large companies have historically chosen to file in these venues. However, these popular venues appear to have a rival.