LBOs can get messy. Such was the case for the Tribune Company, which, in conjunction with its private equity investor, borrowed approximately $10.7 billion in 2007 to finance its buyout. Soon after the LBO was completed, Tribune experienced financial difficulties that made it unable to service its new debt, and, in December 2008, the company filed for chapter 11 protection.
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The oil and gas crisis produced yet another curious set of circumstances and a decision addressing the applicability of the automatic stay to an action against a principal of the debtor. In Luppino v. York, Case No. 16-00409-XR (W.D. Tex. Dec. 8, 2016) (D.I.
Recoupment is an equitable remedy – not expressly addressed in the Bankruptcy Code – that permits the offset of mutual debts arising out of the same transaction or occurrence. Unlike typical setoff, if recoupment applies, prepetition debts can be set off against postpetition debts. A recent decision from the Delaware bankruptcy court demonstrates that the availability of recoupment often depends on how the court defines the contours of the “same transaction or occurrence” requirement.
In chapter 11 reorganizations, Federal Rule of Bankruptcy Procedure 3003(c)(3) provides that “[t]he court shall fix and for cause shown may extend the time within which proofs of claim or interest may be filed” (commonly known as the bar date). For a creditor or interest holder to be subject to this bar date, they must have received notice to satisfy due process. A known creditor, one that is reasonably ascertainable, must receive “actual notice.” Simply receiving a court-approved bar date notice from the debtor is enough to satisfy this requirement for due process.
Roust Corporation (“Roust”) caught everyone’s attention when, on January 6, 2017, Southern District of New York Bankruptcy Judge Robert Drain held a joint first day and confirmation hearing and confirmed the prepackaged plan of reorganization of Roust Corporation and certain affiliates (collectively, the “Debtors”) only six (6) days after the Debtors commenced their chapter 11 cases. In re Roust Corporation, et al., Ch. 11 Case No. 16-23786 (RDD) (Bankr. S.D.NY. Dec. 30, 2016). You’re a seasoned bankruptcy attorney.
The Second Circuit issued its much anticipated decision in Marblegate Asset Management LLC v. Education Management Corp., holding that “Section 316(b) prohibits only non-consensual amendments to an indenture’s core payment terms.” At issue is whether the phrase “right . . . to receive payment” forecloses “more than formal amendments to payment terms that eliminate the right to sue for payment.” The Second Circuit held that it does not.