Bankruptcy & Restructuring

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Bankruptcy Settlements may not have to Comply with the Absolute Priority Rule? Not so fast...

June 29, 2016 | Blog | By Eric Blythe

In an earlier blog piece we reported on the Third Circuit's 2015 decision in In re Jevic Holding Corp. where the Court approved a settlement, implemented through a structured dismissal, which allowed junior creditors to receive a distribution prior to senior creditors being paid in full. The decision was appealed and the Supreme Court agreed to hear the case and decide whether structured dismissals are permissible in bankruptcy.
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TRANQUIL WATERS ONCE AGAIN IN THE SAFE HARBOR: Bankruptcy Safe Harbor Protects Shareholders From State Constructive Fraud Claims

April 13, 2016 | Blog

Shareholders who received nearly $8 billion from the Tribune Company leveraged buyout (LBO) do not have to give back that money as a constructive fraudulent transfer.
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Oil, Gas and Mineral Companies Take Note: Agreements Purporting to “Run with the Land” may be Rejected in Bankruptcy

April 6, 2016 | Blog

A recent bankruptcy court decision from the influential Southern District of New York permitted a debtor to reject executory contracts with midstream gathers as an exercise of sound business judgment.
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You Can Lead a Horse to Water, But You Can’t Call it an Airplane: Supreme Court Oral Arguments Suggest Puerto Rico’s Recovery Act May Recover

March 24, 2016 | Blog | By William Kannel

A few thoughts on Tuesday’s oral arguments before the U.S. Supreme Court in the litigation over whether Puerto Rico’s Public Corporations Debt Enforcement and Recovery Act, an insolvency statute for certain of its government instrumentalities, is void, as the lower federal courts held, under Section 903 of the U.S. Bankruptcy Code:
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DIRECTORS AND OFFICERS’ ULTIMATE ESCAPE FROM PERSONAL LIABILITY

March 15, 2016 | Blog

In the Ultimate Escapes bankruptcy case, the U.S. District Court for the District of Delaware recently held that the “business judgment rule” may protect fiduciaries who negotiate and enter into unconventional financing agreements in an attempt to save the company. In short, a failed business strategy by itself does not lead to liability for breach of fiduciary duty.
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Draft Treasury Legislation Would Give Puerto Rico Access to “Super Chapter 9” and Chapter 9 Bankruptcy

February 25, 2016 | Blog | By Eric Blythe

A draft of the U.S. Treasury’s proposed debt restructuring legislation began circulating earlier today. The draft legislation would give Puerto Rico, as well as other U.S. territories, and their municipalities access to U.S. bankruptcy court under a new chapter of the U.S. Bankruptcy Code (so-called “Super Chapter 9”) as well as making Puerto Rico’s instrumentalities (but not Puerto Rico itself) potentially eligible to file for bankruptcy under existing Chapter 9.
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Mintz Receives M&A Advisor’s Restructuring Community Impact Award

February 23, 2016 | Blog | By Eric Blythe

Mintz was recently honored at the 10th Annual M&A Advisor Awards dinner with the Restructuring Community Impact Award in connection with the Acquisition of Assets of Alsip Acquisition, LLC by Paper Mill Acquisition LLC. 
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Turning A Blind Eye Cost Lender Hundreds Of Millions Of Dollars; Inquiry Notice Spoils Lender’s Good Faith Defense In Fraudulent Transfer Case

February 12, 2016 | Blog

Lending credence to the old adage “if it’s too good to be true, then it probably is,” the Seventh Circuit Court of Appeals recently held that a secured lender was on inquiry notice of possible fraud by its borrower in impermissibly pledging customers’ assets to secure loans.
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Third Circuit Permits Chapter 11 Debtor to Reject Expired CBA

January 26, 2016 | Blog | By Eric Blythe

It is a familiar scenario: a company is on the verge of bankruptcy, bound by the terms of a collective bargaining agreement (CBA), and unable to negotiate a new agreement.  However, this time, an analysis of this distressed scenario prompted a new question: does it matter if the CBA is already expired, i.e., does the Bankruptcy Code distinguish between a CBA that expires pre-petition versus one that has not lapsed?
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Insider Loans Equitably Subordinated

January 22, 2016 | Blog

In SGK Ventures, LLC, the Bankruptcy Court for the Northern District of Illinois ordered that the secured claims of two entities controlled by insiders of the debtor be equitably subordinated to the claims of unsecured creditors.
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Revel: To Stay or Not to Stay? Third Circuit Reveals the Answer (ABI Journal)

January 14, 2016 | Blog

Check out the recent American Bankruptcy Institute Journal cover article in which Rick Mikels and Adrienne Walker explore the circumstances under which a stay pending appeal is appropriate, with a particular focus on 363 sales, through an analysis of the Third Circuit’s decision in In re Revel AC Inc.
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Que Certa, Certa: Supreme Court’s Review of Puerto Rico Recovery Act May Hinder Creditor Negotiations

December 8, 2015 | Blog | By William Kannel, Eric Blythe

It is said that muddy water is best cleared by leaving it be. The Supreme Court’s December 4 decision to review the legality of Puerto Rico’s local bankruptcy law, the Recovery Act, despite a well-reasoned First Circuit Court of Appeals opinion affirming the U.S. District Court in San Juan’s decision voiding the Recovery Act on the grounds that it conflicts with Section 903 of the U.S. Bankruptcy Code, suggests, at a minimum, that at least four of the Justices deemed the questions raised too interesting to let the First Circuit have the last word.
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Piercing The Corporate Veil Takes More Than Just Fraud By The Individual

December 1, 2015 | Blog

Many of us have endured the nightmare of a disastrous home renovation or at least enjoyed Tom Hanks in The Money Pit (How long? Two weeks, of course). Well imagine spending half a million dollars, not for a new and improved home, but rather chasing your contractor for paid, but never completed, work.
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Severance Payments May be Recoverable in a Company's Bankruptcy

November 2, 2015 | Blog | By Eric Blythe

Working for the Queen of Hearts is a tough gig. A disappointing quarter and she's quick to the chopping block. And the 'severance' she offers - "Off with their heads!" - no thanks.
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Taking Bankruptcies Too Fast Around the Curve (The Deal)

October 28, 2015 | Blog | By William Kannel

Bill Kannel was recently quoted in The Deal's article “Taking bankruptcies too fast around the curve” regarding the growing trend of shorter, preplanned Chapter 11 cases. Experts debate the causes and effects including a potential link between case length and refilings as companies skim over key structural and operational issues in favor of more dynamic and immediate fixes.
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A WARNing to Directors and Officers — Failure to Give Proper WARN Act Notice May Breach Your Fiduciary Duty

October 9, 2015 | Blog

At first glance, Stanziale v. MILK072011, looks like someone suing over a bad expiration date and conjures up images of Ron Burgundy proclaiming “Milk was a bad choice.” But in actuality Stanziale is much more interesting: it answers whether one can breach their fiduciary duty by exposing an employer to a claim under the aptly-named WARN Act, which requires employers to tip off their workers to a possible job loss.
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The Evolution of Fiduciary Duties Under Delaware Law

September 28, 2015 | Blog | By John H. Bae, Kaitlin R. Walsh

In a recent New York Law Journal article, “The Evolution of Fiduciary Duties Under Delaware Law”, John Bae and Kaitlin Walsh describe the ongoing development of Delaware law regarding directors’ duties and provide guidance to directors of corporations facing insolvency. 
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Can Alphabet Soup Fix Puerto Rico's Debt Service Issues?

September 28, 2015 | Blog | By William Kannel

Last week the Working Group for the Fiscal and Economic Recovery of Puerto Rico gave the broadest hint yet of the next tactic in Puerto Rico’s ongoing quest to deleverage itself. 
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When it is Fair: Recent Circuit Court Decisions on Equitable Mootness

September 21, 2015 | Blog

Generally, once a plan of reorganization is confirmed and substantially consummated, an appellate court will not “unscramble the egg” and grant appellate relief if doing so would harm third parties that relied on the confirmation order.
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Overview of the Landscape for Evaluating Creditors' Breach of Fiduciary Duty Claims in Delaware

August 31, 2015 | Blog

In our prior post, we discussed the standard a creditor must meet to sue an insolvent corporation for breach of fiduciary duties, as laid out in the Quadrant Structured Products Co., Ltd. v. Vertin decision.
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