07/09/2013 - Delaware Bankruptcy Court Declines to Designate Votes of Parties
In In re Indianapolis Downs, LLC
, the Bankruptcy Court for the District of Delaware provided direction on what constitutes an acceptable "post-petition lock-up agreement" and joined a majority of decisions that have narrowly construed the prohibition in the Bankruptcy Code against post-petition solicitation of a vote for a plan prior to circulation of a court-approved disclosure statement.
04/11/2013 - Weathering the Storm: Seventh Circuit Expands Application of Federal Standard for Successor Liability to FLSA
On March 26, 2013, in the case of Teed v. Thomas & Betts Power Solutions, L.L.C
., the Seventh Circuit, in an opinion written by Judge Posner, joined at least one other circuit court and a multitude of district courts across the country in extending the federal common law standard for evaluating successor liability to suits brought under the Federal Labor Standards Act (“FLSA”).
02/13/2013 - Weathering the Storm: Delaware Bankruptcy Court Declines to Designate Votes of Parties to a Post-Petition Restructuring Support Agreement
On January 31, 2013, the Bankruptcy Court for the District of Delaware in In re Indianapolis Downs, LLC declined to designate the votes of parties to a post-petition restructuring support agreement (i.e., a lock-up agreement), instead confirming the Debtors’ Modified Second Amended Joint Plan of Reorganization (the “Plan”) based on the votes of such parties.
05/31/2012 - Supreme Court in RadLAX Rules that Cramdown Plans Providing for Sales of Secured Creditors’ Collateral Must Allow for Credit Bid Rights
In what it described as "an easy decision," the U.S. Supreme Court issued its eagerly anticipated decision in RadLAX Gateway Hotel, LLC et al. v. Amalgamated Bank
on May 29, 2012. The high court's 8-0 ruling, delivered by Justice Scalia, held that a Chapter 11 bankruptcy cramdown plan providing for the sale of a secured creditor’s collateral free and clear of the secured creditor's lien may not use Bankruptcy Code § 1129(b)(2)(A)(iii) to deny the secured creditor the right to "credit bid" on its own collateral.
11/04/2011 - Law360 Guest Article: Case Study - In Re Tribune Co.
Law360, New York (November 04, 2011, 4:43 PM ET) -- Halloween provided frights for debtors and a victory for creditors when Judge Kevin Carey issued his opinion in the Tribune Company bankruptcy cases in Delaware.
04/11/2011 - Weathering the Storm: District Court Imposes Additional Duties on Creditors Seeking to Reclaim Goods Sold to a Debtor During the 45-Day Period Preceding the Bankruptcy Case
Vendors who sell goods to customers are probably familiar with the issues that arise when the customer later files bankruptcy. For instance, Section 546(c) of the Bankruptcy Code (and applicable state law) provides a vendor the right to reclaim goods it sold to the customer within 45 days of the bankruptcy petition date.
02/15/2011 - Weathering the Storm: Good News For Lenders – District Court Reverses TOUSA Fraudulent Transfer Opinion
In a welcome bit of good news for lenders, U.S. District Court Judge Gold (Southern District of Florida) reversed the portion of the 2009 bankruptcy court decision in the TOUSA, Inc. bankruptcy cases that had ordered the disgorgement of $403 million plus interest based on the holding that the amounts were received by certain lenders to the TOUSA parent in connection with a pre-petition transaction that constituted a fraudulent transfer.
02/14/2011 - Weathering the Storm: Ability to Gift New Equity to Old Equity through Plan Disapproved in the Second Circuit and Ulterior Motives in Purchasing Debt Could Lead to Designation of Vote
On February 8, 2011, the Second Circuit Court of Appeals issued an opinion that will have a major impact on Chapter 11 plan confirmation.
02/02/2011 - The IP Beacon, February 2011
A Haynes and Boone Newsletter highlighting current issues in Intellectual Property Law.
11/15/2010 - Weathering the Storm: Buyer Beware, Fifth Circuit Rules Purchasers of Reorganized Debtors Liable for Undervalued Claim
In an October 19, 2010 opinion arising out of the Scotia Pacific bankruptcy cases, the Fifth Circuit ruled that reorganized Scotia and its affiliate Pacific Lumber Company were obliged – nearly 2½ years after Scotia’s reorganization plan was consummated – to pay Scotia’s former secured lenders approximately $30 million on account of a mistake made by the bankruptcy judge in calculating the amount owed to the secured lenders for the use of their collateral during the bankruptcy cases.
10/27/2010 - Weathering the Storm: Third Circuit Concurring Opinion Supports Trademark Licensees’ Retention of Rights in Bankruptcy Cases
The concurring opinion in a recent Third Circuit Court of Appeals case suggests that trademark licensees may be able to retain their rights in bankruptcy cases, even if licensors reject the license agreements.
10/19/2010 - Weathering the Storm: Delaware Bankruptcy Court Rules Bid Procedures in Section 363 Sale Were Unfair and Unreasonable
On September 30, 2010, in In re American Safety Razor, LLC, et al.,
Case No. 10-12351 (MFW), the United States Bankruptcy Court for the District of Delaware ruled that the debtors’ proposed bid procedures for the sale of the business were unfair and unreasonable. The bid procedures, among other things, provided too much discretion to the debtors in the auction process.
10/13/2010 - Weathering the Storm: Court Ruling Won't Allow Secured Creditors To Be Shut Out by Crafty Bid Procedures
On October 5, 2010, Judge Bruce Black of the United States Bankruptcy Court for the Northern District of Illinois (the “Bankruptcy Court
”) issued a ruling in the River Road Hotel Partner LLC, et. al.
”) bankruptcy cases denying the Debtors’ bid procedures motion incident to plan confirmation.
04/07/2010 - Weathering the Storm: Does the Bankruptcy Code Restrict a Liquidation Trustee’s Power after Plan Confirmation?
Reversing the decision of the United States District Court for the Northern District of Illinois, the Seventh Circuit (the “Court”) held in Grede v. Bank of New York Mellon, et al.,
No. 09-3121 (7th Cir. Mar. 18, 2010) that neither the Bankruptcy Code (the “Code”) nor the Supreme Court’s decision in Caplin v. Marine Midland Grace Trust Co.,
406 U.S. 416 (1972) apply to the activities of a post-confirmation liquidating trustee appointed in a liquidating trust created by a confirmed plan of reorganization.
03/31/2010 - Weathering the Storm: The Mervyn's Holdings Decision: A Lesson for Sellers and Equity Firms Participating in Leveraged Buyouts
The recent case of Mervyn’s LLC v. Lubert-Adler Group IV, LLC, et al.
(In re Mervyn’s Holdings, LLC), serves as a warning to sellers and equity firms participating in leveraged buyouts to be wary of the effect such buyouts will have on creditors of the target company.
03/25/2010 - Weathering the Storm: Third Circuit Ruling on Credit Bidding is Bad News for Lenders
On March 22, 2010, the Third Circuit released its long-awaited ruling in the Philadelphia Newspapers case regarding the applicability of credit bidding. In Philadelphia Newspapers, the proposed plan of reorganization provided for a sale of assets free of the liens of the secured creditors without allowing the secured creditors to credit bid on the assets.
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. This alert discusses 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.
12/11/2009 - 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.
10/14/2009 - Managing Maturing Debt and Refinance Risks in the Private Equity Real Estate Market
Presentation on current issues in the private equity real estate market for iGlobal Forum's 3rd Real Estate Private Equity Summit, New York City, October 14, 2009.
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.