03/11/2010 - Weathering the Storm: Single Asset Real Estate Cases
From 2010 until 2013, approximately $1.4 trillion of commercial real estate loans will mature. Notably, it has been estimated that nearly 50 percent of the loans are under water and that a wave of defaults and bankruptcies may occur. Because many of the commercial real estate loans are secured by a single parcel of real estate, it is critical that lenders and debtors be aware of the rules governing Single Asset Real Estate (SARE) Chapter 11 cases.

02/23/2010 - Weathering the Storm: The FDIC’s Authority to Repudiate Contracts
The current economic climate has led to a dramatic increase in bank failures over the past few years. In 2009 alone, 140 banks failed, compared to 26 bank failures in 2008 and only 3 bank failures in 2007. The Federal Deposit Insurance Corporation (the “FDIC”) recently announced that it has 702 banks on its “Problem List” as of December 31, 2009, up 27 percent from 552 banks on September 30, 2009. This acute trend has heightened the awareness and interest in the role of the FDIC as receiver of a failed bank.

02/08/2010 - Weathering the Storm: Conditions Precedent in Term Sheets Matter
In a decision that is not surprising, but that should be welcomed by lenders (but perhaps not by borrowers), the Appellate Division of the New York Supreme Court held in Amcan Holdings, Inc., et al. vs. Canadian Imperial Bank of Commerce, et al., Case No. 603393/07, that a detailed, executed term sheet was not a binding contract to lend.

12/22/2009 - Weathering the Storm: Insurance Coverage and Insolvency: Maximizing Recovery In Bankruptcy
While memorable for many things, 2009 may long be remembered as a year of record corporate insolvency. Now more than ever, it is crucial that debtors, creditors, trustees, and, indeed, anyone with an interest in maximizing the financial resources on hand to satisfy debts, understand (1) what coverage may potentially be available; and (2) how to gain access to and maximize this important financial resource.

Weathering the Storm: Charter Communications Decision Allows Reinstatement of Debt
Many companies secured their financing several years ago when the credit market featured advantageous pricing and loose loan covenants. Because these favorable terms would be impossible for borrowers to obtain in today’s lending environment, many viable companies with highly leveraged capital structures are looking for strategies to restructure debt. Charter Communications (“Charter”), the country’s fourth largest cable television company, took a gamble during, arguably, the most challenging period in the modern era of global corporate finance.  See how the company's bold moves paid off. 

12/01/2009 - In re General Growth Properties, Inc.: Motions to Dismiss SPE Cases....Denied
In the recent heyday of real estate and structured finance, the use of “bankruptcy-remote” special purpose entities (“SPEs”) as borrowers was a fundamental underwriting requirement by lenders, and a critical factor considered by ratings agencies, to shield lenders and their collateral from the potentially adverse impact of bankruptcy filings by their borrowers’ parents and affiliates.

10/21/2009 - Weathering the Storm: Savings Clauses: Fraudulent Transfer Issues in the TOUSA Bankruptcy Case
The judge's ruling in the October 13, 2009 TOUSA, Inc. bankruptcy cases raises a number of troubling issues for commercial lenders, including but not limited to, the judge calling into question the enforceability of fraudulent conveyance “savings clauses,” common in commercial loan agreements.

09/09/2009 - Weathering the Storm: Guidelines Issued for Private Equity Investors Acquiring Failed Banks or Thrifts
The interest from the private equity community in filling the growing capital gaps that exist in the balance sheets of U.S. banks has spurred the FDIC Board to adopt a Final Statement of Policy on Qualifications for Failed Bank Acquisitions (the “Policy Statement”). The Policy Statement, published on September 2, 2009, provides private equity investors with guidelines for acquiring failed banks or thrifts.

08/25/2009 - Weathering the Storm: Recent Court Decision Exposes the Reach of a Corporate Family’s Financial Distress to its Bankruptcy-Remote Special Purpose Entities and Their Lenders
In the recent heyday of real estate and structured finance, the use of “bankruptcy-remote” special purpose entities (SPEs) as borrowers was a fundamental underwriting requirement by lenders in many loans, and a critical factor considered by ratings agencies, to shield lenders and their collateral from the potentially adverse impact of bankruptcy filings by their borrowers’ parents and siblings.

07/20/2009 - Weathering the Storm: Fiduciary Duties of Officers and Directors in Troubled Company Situations
Directors and officers managing corporations, especially when the corporation is insolvent or operating in insolvency situations, need to be cognizant of their fiduciary duties. This alert provides a brief overview of these fiduciary duties, including practical considerations in the exercise of these duties.

07/01/2009 - Weathering the Storm: The Appointment of an Examiner
With the economic crisis leading to the failure of many businesses, bankruptcy cases are on the rise. In many of the cases grabbing headlines, such as Lehman Brothers, Nellson Nutraceutical, New Century and SemCrude, courts have shown a willingness to appoint examiners to investigate, report on and make recommendations regarding possible issues of mismanagement, fraud or other improprieties relating to the affairs of the debtor or its former or current management.

06/25/2009 - Weathering the Storm: Top 10 Practical Things to Know about Bankruptcy
Bankruptcy is a highly specialized legal practice area that can be difficult for the non-lawyer to navigate. Bankruptcy can also present many traps for the unwary. A bankruptcy or distressed financial situation will in most cases materially affect a company’s key relationships, customers, suppliers and business partners. All company decision makers need an understanding of how to react to protect their organization’s interests. Here are ten practical considerations to recognize in this distressed environment.

06/19/2009 - Weathering the Storm: Options to Remove Liabilities for High Retiree Medical Costs from a Company’s Balance Sheet: VEBAs
High legacy costs for retiree medical benefits, along with Financial Accounting Standards Board Standard No. 158, which requires balance sheet recognition of such liability, has forced many companies to face the true size of the retiree medical obligations and to consider ways to reduce or limit costs.

06/12/2009 - Weathering the Storm: Look Out Lenders—Collecting Fees For Loaning Money May Be Considered Evil
In a recent case, a Bankruptcy Court in Montana equitably subordinated a pre-bankruptcy secured lender’s first lien claims to the claims of the DIP lender and the unsecured creditors even though the lender did not owe any fiduciary duties to the debtor or any of the debtor’s potential creditors.

05/27/2009 - Weathering the Storm: Retiree Benefits and Section 1114
Retiree benefits are often a central issue in bankruptcy cases. For many employers the high cost of retiree medical benefits has been a significant contributing factor to the Chapter 11 filing and a matter of ongoing concern if the debtor is to be able to successfully reorganize. Understandably, employees, retirees and unions are equally concerned about the status of retiree benefits. This alert discusses Section 1114 of the Bankruptcy Code.

05/21/2009 - Weathering the Storm: Are Your Deposits Insured?
The Federal Deposit Insurance Corporation (the “FDIC”) is celebrating its 75th anniversary this year, and due to the economic downturn, 2009 will pose a substantial challenge to the FDIC. FDIC Chairman Sheila C. Bair said in a recent speech that “No one has ever lost a penny of an insured deposit.” President Obama stated during his first address to a joint session of Congress, “You should also know that the money you’ve deposited in banks across the country is safe; your insurance is secure; you can rely on the continued operation of our financial system. That is not a source of concern.” These two quotes help set the tone that the Government stands behind the security of “insured” deposits.

05/07/2009 - Weathering the Storm: Modifying Your Company’s Debt: Tax Trap or Treasure?
Debtors increasingly are requesting that their creditors modify the terms of their debts because of difficulty or inability to service their debts in accordance with the debts’ existing terms. Faced with the prospect of debtor defaults and having to foreclose on property securing their loans causing the accrual of financial losses, creditors, too, often have an incentive to restructure debt to maximize their returns.

04/23/2009 - Weathering the Storm: Recent Decision Affects Setoff Under Netting Agreements
Companies that engage in multiple transactions with different entities of related groups often enter into contractual netting agreements that allow the setoff of obligations between entities within the groups. The effectiveness of these agreements has been called into question by a recent decision of a bankruptcy court in Delaware, which refused to allow a party to a contractual netting agreement to offset its obligations to the debtors against obligations of the debtors under the netting agreement. Parties to such netting agreements may have to reconsider how to structure such agreements and how to defend their effectiveness in court.

04/15/2009 - Weathering the Storm: Great Deals Now Available in Bankruptcy Court
Whether you are interested in purchasing assets or a going concern, bankruptcy court can be a land of opportunity. Assets may be sold by a trustee, or someone the trustee retains, in a Chapter 7 liquidation, or by a Debtor-in-Possession (a “DIP”) in a Chapter 11 reorganization case. In either case, you should expect a competitive bidding process.

04/09/2009 - Weathering the Storm: Terminations, Uncertainty, and Strategies to Reduce Workplace Liability
In the current economic state, many employers are seeking to reduce operating costs. More employees are being let go as corporate layoffs have accelerated and workers are looking to complain that they have been unfairly or improperly dismissed. The Obama administration has publicly announced that it will be more aggressive in enforcing employment laws.

04/01/2009 - Weathering the Storm: Bankruptcy - Pay Attention from the Start Because Things Happen Fast
When a company files bankruptcy, it is crucial to closely monitor the bankruptcy proceedings from the beginning. After filing its petition, the debtor will likely file numerous “first day motions” intended to stabilize the Debtor’s business and facilitate an efficient case administration. These motions can severely affect the rights of unwary creditors who may find their interests primed by the actions of the debtor in the first few days of the case.

08/30/2007 - Enron--Appellate Court Overturns Ruling on Equitable Subordination and Claims Disallowance
‘Taint Clear: “Purchased” Claims are Not Subject to Equitable Subordination or Disallowance Based Solely on Seller’s Conduct, but Purchaser’s Knowledge of the Seller’s Conduct May Be Fatal

04/12/2007 - Supreme Court Holding Allows Bankruptcy Proofs of Claim to be Amended to Recover Attorneys' Fees
On March 20, 2007, the United States Supreme Court issued a unanimous opinion in Travelers Casualty & Surety Co. of America v. Pacific Gas & Electric Co., No. 05-1429, 2007 WL 816795 (March 20, 2007), holding that a creditor may supplement its unsecured claim in a bankruptcy case to recover contract-based attorneys’ fees incurred during the bankruptcy case through the litigation of bankruptcy law matters.

01/14/2002 - Enron Bankruptcy: Purchasing Assets from Enron and its Subsidiaries and Affiliates
Enron announced in court Friday, January 11, that it had selected UBS Warburg’s bid for its wholesale commodity trading business.  Many details concerning the sale remain to be resolved through the bankruptcy court process. Importantly for Haynes and Boone’s energy clients, there are many other Enron assets remaining on the auction block. 

12/06/2001 - Enron Bankruptcy: Producer's Rights Under Product Purchase Contracts- Royalty Payments

12/05/2001 - Enron Bankruptcy: Counter-Party Rights Under Derivative Contracts
The bankruptcy filing by Enron Corp. and several of its subsidiaries, including its principal energy trading subsidiary, creates a number of issues for our clients, including those clients who are in the exploration and production business and who have entered into financial and physical swaps, puts and other derivative contracts with Enron or one of its subsidiaries.