The court overseeing the chapter 11 bankruptcy cases of Lehman Brothers Holdings Inc. and various subsidiaries (the “Debtors”), has entered an order establishing deadlines and procedures for filing claims against the Debtors. In terms of procedural requirements, the order places unusual burdens on parties whose claims are based on derivative contracts and guarantees.
One of the primary business restructuring goals is the adjustment of a company’s burdensome obligations. If a business is going to be reorganized, matching a company’s obligations to its value is key to the rehabilitation and “fresh start” concepts that underpin the Bankruptcy Code.
In a recent decision, the United States District Court for the Southern District of Texas affirmed the bankruptcy court’s rejection of the cost methodology to value the right to use common amenities in a condominium development and, in the process, bolstered the notion that bankruptcy courts have discretion in determining what valuation methodologies are appropriate under the facts and circumstances of a particular case.
Everyone loves a bargain – accordingly, there is a lot of interest when liquidators and other insolvency practitioners put a business up for sale. Purchasers jostle like shoppers in the Myer stocktake sale, trying to position themselves as the perfect purchaser. At the same time they try to convey their concern about the value of the business or assets – everyone expects a discount for a distressed business.
Getting your house in order
Understand your counterparty risks
It is very important in the present climate to understand your contracts and your counterparty risks. We are finding an increasing number of clients “stress testing” their contracts and considering the consequence of an insolvency event. This is good practice; particularly since to identify weaknesses in structures and counterparty risk upon insolvency may afford you the time to fix it before things do go wrong.
Where are the documents?
Introduction
Following the administration proceedings recently instituted against a number of UK entities (Affected Companies), many counterparties (Counterparties) may wish to terminate transactions under the TBMA/ISMA Global Master Repurchase Agreement (GMRA) entered into between them and Affected Companies.
Gleave and others v The Board of the Pension Protection Fund [2008] EWHC 1099 (Ch)
The High Court ruled that calculations of employer debt by scheme actuaries cannot be challenged by insolvency practitioners unless there is evidence of fraud or error.
[2008] EWHC 1099 (Ch)
The High Court has ruled that calculations of employer debt by scheme actuaries cannot be challenged by insolvency practitioners unless there is evidence of fraud or error.