Haynes and Boone Bankruptcy and Business Restructuring Practice Honored at 2011 Turnaround Atlas Awards
NEW YORK –Haynes and Boone, LLP has been awarded the Chapter 11 Turnaround of the Year ― Middle Markets Award in the 2011 Turnaround Atlas Awards program for its successful representation of a second-lien agent and a second-lien lender group in the FX Luxury Las Vegas I, LLC bankruptcy case.
Haynes and Boone Partner Lenard M. Parkins led the team in the case in the Las Vegas bankruptcy court. On behalf of the clients, the team obtained ownership of a 17-acre mixed use commercial property located on the Las Vegas strip across from CityCenter development.
“Our thanks go to the Atlas Awards for continuing the tradition of honoring excellence from the turnaround and reorganization industries worldwide,” said Mr. Parkins, leader of the Bankruptcy and Business Restructuring Practice in the New York office. “We take pride in this award, and I congratulate all team members involved and thank them for their hard work and ingenuity.”
Mr. Parkins was assisted by bankruptcy partners Henry Flores and Trevor Hoffmann, associates Jonathan Hook, Brooks Hamilton, David Liebenstein, Jarom Yates and Stephen Manz, as well as corporate Partner Steven A. Buxbaum and finance Partner Kenneth V. Herz.
FX Luxury Las Vegas I, LLC filed for Chapter 11 protection in April 2010 in the U.S. Bankruptcy Court for the District of Nevada, saying its debts, which exceeded $500 million, were far in excess of the property value of less than $190 million.
Haynes and Boone lawyers were instrumental in defeating the debtor’s proposed bid procedures and plan support agreement, which were designed to effectuate the debtor’s prearranged plan with the first lien lenders and the debtor’s insiders. The debtor’s plan would have eliminated any recovery for the firm’s second-lien lender clients. Firm attorneys also worked to defeat the first-lien lender’s motion to lift the automatic stay to foreclose on the property, which was filed when the first-lien lenders realized that they would not be able to proceed with the prearranged plan. Most critically, the team successfully moved to terminate exclusivity within 60 days of the petition date so that the lender clients could file their own plan and disclosure statement. It was the first time this court had terminated exclusivity in any case.
The clients’ restructuring plan was approved in November 2010 and effectuated in December 2010. It gave the firm’s clients the equity in the reorganized debtor. Those lenders had claims totaling about $233.1 million. The lender clients also contributed an additional $1.2 million to the reorganized company to effectuate the plan. The first-lien lenders, which had approximately $270 million in claims against FX, received a new first-lien note worth $188 million, the estimated value of property, at a 3.95 percent rate of interest. In addition, the first-lien note holders received a junior note worth $78.5 million at a 2.5 percent rate of interest, with interest payments amortizing the principal amount of the junior note on a dollar-for-dollar basis. In between these two notes, the lender clients received “sandwich debt” in the amount of $10.6 million, comprising $1.2 million for plan consummation expenses, at a 12 percent rate of interest, and $9.4 million for advisory fees and other costs in connection with the case, at a 3.95 percent rate of interest. The battling lender groups agreed to drop pending adversary proceedings upon the plan becoming effective.
The Turnaround Atlas Awards, presented at a dinner and gala on June 16 in Chicago, honor excellence based on measurable performance metrics such as turnaround style, pre/post financial workout and sustainability, operational/client/HR metrics, complexities per number of creditors, sector challenges, timeliness, negotiation and jurisdictional intricacies, professional leadership, and resourcefulness, among other criteria unique to the award category. More than 238 eligible assignments and deals were evaluated globally toward selecting this year’s finalists.