In orders issued on January 25 and 28, 2019, FERC concluded that the Commission and the bankruptcy courts have concurrent jurisdiction to review and address the disposition of FERC-jurisdictional contracts sought to be rejected through bankruptcy and, therefore, a party to a FERC-jurisdictional wholesale power agreement must first obtain approval from both FERC and the bankruptcy court to modify the filed rate and reject the filed wholesale power contract, respectively. FERC made its determination in response to two separate petitions (“Petitions”) filed by NextEra Energy, Inc.

In a recent significant opinion, Judge Marvin Isgur of the US Bankruptcy Court for the Southern District of Texas held that a springing lien to senior noteholders, conditioned on the amount of iHeart notes outstanding, was not triggered where an iHeart subsidiary repurchased notes and left them outstanding past maturity.1 The Court rejected various creditor arguments that the notes were canceled as a matter of law, or that actions to avoid the springing lien entitled creditors to equitable remedies.

On January 14, 2019, facing “billions of dollars in liability claims from two years of deadly wildfires,”[i] PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric Company, reported that they expect to file petitions under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Northern District of California on or about January 29, 2019.

R&I Alert Restructuring & Insolvency News January 2019, Issue 1 In This Issue: • Can a junior lien holder obtain discovery from a senior lien holder? 1 • Watch your language.

Fifth Circuit finds that make-whole premiums should be considered unmatured interest subject to disallowance under Section 502(b)(2) of the Bankruptcy Code to the extent designed to compensate for future interest payments.

Overview

In its ruling in FTI Consulting, Inc. v. Sweeney (In re Centaur, LLC), the United States Bankruptcy Court for the District of Delaware addressed the Supreme Court’s recent clarification of the scope of Bankruptcy Code Section 546(e)’s “safe harbor” provision, affirming a more narrow interpretation of Section 546(e).

On January 9, 2019, California Attorney General Xavier Becerra filed a motion with the U.S.

Fifth Circuit Holds that Disallowance of Claim Pursuant to the Bankruptcy Code Does Not Render Such Claim Impaired and Casts Doubt on Creditors’ Ability to Recover Make-Whole Amounts or Post-Petition Interest at the Default Contract Rate

Executive Summary

Can a profit-sharing provision in a commercial lease survive assumption and assignment by a debtor? Analyzing such a provision, the Third Circuit answered “no,” finding the provision to constitute an unenforceable anti-assignment provision. Haggen Holdings, LLC v. Antone Corp, 739 Fed. Appx. 153 (2018).

Legal and Factual Background

On January 17, 2019, the Fifth Circuit held that a creditor is not impaired for the purpose of voting on a plan if it is the Bankruptcy Code (as opposed to plan treatment) that impairs a creditor’s claim. The court further held that a make-whole premium is a claim for unmatured interest which is not an allowable claim under Bankruptcy Code, absent application of the “solvent-debtor” exception which may or not apply—the issue was remanded to the bankruptcy court for decision.