The Bottom Line:

On April 9, 2008, in the M. Fabrikant & Sons, Inc. bankruptcy case pending in the Southern District of New York, Chief Judge Stuart M. Bernstein held that a seller of bank debt under the standard LSTA claims transfer documents transfers all of its rights except for those explicitly retained, including unmatured contingent claims, thus giving broad construction to the term “Transferred Rights” under the standard LSTA trade documents.

The United States Bankruptcy Court for the District of Delaware has approved a settlement agreement between three Sea Containers companies, their unsecured creditors and the trustees of the two pension schemes belonging to the UK subsidiary Sea Containers Services Limited.

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

Summary

Eastman Kodak Corporation (Kodak US), the US parent of the Kodak group, filed for chapter 11 protection in the US on 19 January 2012. It successfully emerged from bankruptcy on 3 September 2013 as a new restructured technology company focused on imaging for businesses. Many other Kodak companies throughout the world were able to avoid following in their parent’s footsteps and were maintained as going concern businesses while the US bankruptcy process was ongoing.

Summary

This briefing summarizes the recent U.S. Bankruptcy Court order establishing bar dates for creditors filing claims in relation to debts owed to them by Lehman Brothers entities in Chapter 11 bankruptcy proceedings. Specifically, this briefing discusses who must file a proof of claim, how to file the proof of claim, and the special requirements for claims in respect of derivative contracts, guarantees and Lehman program securities.

On January 30, 2013, Judge Christopher Klein of the Bankruptcy Court for the Eastern District of California held that, pursuant to section 904 of the Bankruptcy Code, a municipal debtor is not required to seek court approval to enter into settlements with and make settlement payments to prepetition creditors during the pendency of its chapter 9 case. The decision demonstrates the broad scope of section 904 and the free reign that a municipal debtor enjoys under that section during the pendency of its chapter 9 case. In re City of Stockton, Cal., Case No. 12-32118 (Bankr. E.D. Cal.

On June 22, 2012, Judge Robert E. Gerber of the United States Bankruptcy Court for the Southern District of New York granted the U.S. Trustee’s motion to transfer the chapter 11 cases of Houghton Mifflin Harcourt Publishing Company and its affiliates to a different venue, notwithstanding the fact that the debtor’s prepackaged plan had been confirmed with unanimous support from its creditors, the cases were projected to conclude within 30 days of filing, and the debtors’ primary creditor constituencies supported venue in New York.

Earlier this year, the U.S. Court of Appeals for the Second Circuit held that a proposed “gifting” plan distributing value from the second lien lenders to the prepetition equity holder violated the absolute priority rule and was confirmed in error.2 This decision, by a 2-1 panel vote,3 reversed the decisions of the Bankruptcy and District Courts for the Southern District of New York. The Second Circuit also affirmed unanimously the designation of the vote of an indirect competitor of the debtor that held no claims prior to the petition date.

The Third Circuit Court of Appeals recently affirmed the District Court’s ruling in In re Philadelphia Newspapers, LLC.1 The Court allowed Philadelphia Newspapers, LLC to require all-cash bids for the asset sale under their proposed plan. This precluded secured creditors from credit bidding, as long as the plan provided those creditors with the “indubitable equivalent” of the value of their claims.