Bankruptcy & Restructuring

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Director Fiduciary Duties May Extend Post-Closing in Multi-Stage Transactions

April 16, 2021 | Blog | By Andrew B. Levin

A recent decision by the United States District Court for the Southern District of New York highlights directors’ fiduciary duty to evaluate all aspects of multi-stage transactions, including those portions to be effectuated post-closing by successor directors.
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The Expanding Contours of Permissible Non-Debtor Releases in the Ninth Circuit

April 1, 2021 | Blog | By Andrew B. Levin, William Kannel

In a recent decision, In re Astria Health, Case No. 19-01189-WLH11, 2021 Bankr. LEXIS 155 (Bankr. E.D. Wash. January 22, 2021), the Bankruptcy Court for the Eastern District of Washington arguably further expanded the context in which non-debtor releases may be allowed.
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Consolidated Appropriations Act of 2021 Amends Bankruptcy Code

Part 3: Congress Gives Suppliers and Landlords a Shiny New Arrow in their Quiver to Challenge Preference Actions

February 2, 2021 | Blog | By Joseph Dunn, Abigail O'Brient

For bankruptcy litigators – or any business which has been frustrated to receive a demand letter after one of its customers filed bankruptcy – one particular amendment stands out in the CARES ACT bill. The Act amended Section 547 of the Bankruptcy Code to provide suppliers and landlords with an additional potential challenge to actions brought to “claw back” payments made by a debtor in the 90 days preceding bankruptcy.
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Consolidated Appropriations Act of 2021 Amends Bankruptcy Code

Part 2: Amendments Affecting Landlords

January 29, 2021 | Blog | By Andrew B. Levin, Abigail O'Brient

The CARES Act assists debtors by amending Section 365(d)(3) of the Bankruptcy Code to allow, at the bankruptcy court’s discretion, small business debtors experiencing pandemic-related financial hardship an extra 60 days, in addition to the initial 60-day grace period, to make payments under unexpired leases of non-residential real property following the bankruptcy filing date.
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Consolidated Appropriations Act of 2021 Amends Bankruptcy Code

Part 1: Amendments Clarifying Debtors’ Rights to Other Pandemic Relief

January 26, 2021 | Blog | By Andrew B. Levin, Abigail O'Brient

The CARES Act benefits both debtors and creditors by temporarily modifying several sections of the Bankruptcy Code, which may be of particular interest to creditors.
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The Automatic Stay: Supreme Court Finds that Retaining Debtors’ Property, Despite Turnover Demands, is Not a Stay Violation

January 21, 2021 | Blog | By Eric Blythe

The Automatic Stay: Supreme Court Finds that Retaining Debtors’ Property, Despite Turnover Demands, is Not a Stay Violation
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Amendments to Bankruptcy Rules Set to Take Effect on December 1, 2020

December 1, 2020 | Blog | By Tim McKeon

On December 1, 2020, certain amendments to the Federal Rules of Bankruptcy Procedure take effect. The amendments largely modify rules governing bankruptcy appeals, but also impact Rules 2002 and 2004.
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Bankruptcy Court Upholds Indian Tribe’s Sovereign Immunity

November 5, 2020 | Blog | By Aaron Williams

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363 Sales as a Health Care M&A Tool, Part 2 – Pros and Cons for Buyers and Sellers

September 11, 2020 | Blog | By Deborah Daccord, William Kannel, Rachel Irving Pitts, David Chorney, Tim McKeon

Over the summer, we wrote about why health care companies may want to consider buying assets out of bankruptcy, taking advantage of the Bankruptcy Code Section 363 sale process (a "363 Sale”). We are back with our second post, to provide more detail to the process and discuss some pros and cons of 363 Sales.

As a refresher, a 363 Sale couples a flexible and fast process with ample liability protection for willing buyers. The primary benefit of a 363 Sale is that a buyer can acquire the debtor’s assets free and clear of virtually all liens, claims, and interests burdening the assets and the debtor. And when Section 363 is coupled with the “assumption and assignment” provisions of Section 365 of the Bankruptcy Code, a debtor is able to assign most contracts or leases that a buyer may wish to purchase, including contracts with ironclad anti-assignment language, provided that certain conditions are satisfied. When a target is experiencing severe financial distress, the benefit of acquiring assets “free and clear” is extraordinarily valuable.
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Third Circuit Upholds Cramdown, Downplays Subordination Agreement

September 4, 2020 | Blog | By Aaron Williams

The U.S. Court of Appeals for the Third Circuit recently confirmed that bankruptcy plans need not always recognize subordination agreements among creditors.
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363 Sales as a Health Care M&A Tool, Part 1 – Overview

July 28, 2020 | Blog | By Deborah Daccord, William Kannel, Rachel Irving Pitts, Tim McKeon, David Chorney

Although health care may be well positioned to weather an economic downturn as an industry, certain sectors, including ambulatory surgery, vision, dermatology, dental, and other physician practices will bear the brunt of COVID-19 stay-at-home orders and patients delaying non-emergency care. While the onset of COVID-19 has delayed or derailed many transactions, strategic buyers should consider all of the different transaction tools available them to help maximize value and successfully get to closing. For knowledgeable investors and strategic buyers, now is the time to position yourself to acquire valuable health care assets at steep discounts.

For those unfamiliar with 363 Sales, a 363 Sale couples a flexible and fast process with ample liability protection for willing buyers. The primary benefit to a 363 Sale is that a buyer can acquire the debtor’s assets free and clear of virtually all liens, claims and encumbrances burdening the assets and the debtor. When a target is experiencing severe financial distress, the benefit of acquiring assets “free and clear of all liens” is extraordinarily valuable.
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Top 10 Questions Human Resources May Have When Their Company is Filing for Chapter 11 Protection

June 2, 2020 | Blog | By Andrew Matzkin, Kaitlin R. Walsh, William Kannel

Businesses in a wide range of industries may now be forced to consider bankruptcy given the unprecedented economic challenges caused by the COVID-19 pandemic. This advisory is designed to provide a high-level view of issues to be considered by human resources when considering filing for Chapter 11 bankruptcy.
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Are Leveraged Loans Subject To Securities Laws? It Depends…

June 1, 2020 | Blog | By Eric Blythe

Leveraged loans continue to be a topic of interest in the current environment, particularly when they are pooled and securitized as collateralized loan obligations. A recent decision sheds light on whether and when leveraged loans and similar instruments may be classified as securities and, therefore, be subject to securities laws.
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Delaware Bankruptcy Court Rules that Shareholder Cannot Enforce “Golden Share” Blocking Right to Dismiss Bankruptcy Filed Without its Consent

May 27, 2020 | Blog | By Tim McKeon

As the COVID-19 pandemic continues to disrupt businesses and markets, and companies begin to look to bankruptcy courts for relief from the resulting liquidity and operational distress, the issue of creditor and shareholder “blocking rights” seems likely to become an important topic as parties attempt to protect their investments.
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Fraud Investigations and Complex Asset Recovery in 2020: A Q&A With Mintz Cross-Border Asset Recovery Co-Chairs Dan Pascucci and Joe Dunn

April 27, 2020 | Blog | By Joseph Dunn, Daniel Pascucci

With courts and government agencies around the world enacting emergency measures in response to the Covid-19 pandemic – ranging from complete shutdowns to delays and limitations – advancing the ball in dispute resolution is more challenging than ever.
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First Circuit Issues Important Ruling on Valuing Secured Claims in Settled Causes of Action

April 22, 2020 | Blog | By Tim McKeon

In a recent decision addressing valuation issues, the First Circuit has issued an important reminder – and warning – to creditors seeking to establish a secured claim in settlement proceeds based on a security interest in the settled claim. In short, the key lesson for would-be secured creditors is this – the value of a claim is not equal to the value of damages!
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Small Business Chapter 11 Eligibility Expanded Under CARES Act

April 2, 2020 | Blog

President Trump signed the Small Business Reorganization Act of 2019 (the “SBRA”) into law in August of last year and it became effective on February 20, 2020. The SBRA amended the U.S. Bankruptcy Code and is designed to simplify and shorten the reorganization process for “small businesses” and to make the entire process more cost effective.
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The Coronavirus Aid, Relief, and Economic Security Act: Assistance Available to Passenger Airlines and Airports

March 31, 2020 | Blog | By Tim McKeon, William Kannel

On March 27, 2020, President Trump signed into law the “Coronavirus Aid, Relief, and Economic Security Act” (the “CARES Act”), a $2+ trillion stimulus package intended to ease the economic and social disruptions facing the country in the wake of the COVID-19 outbreak.
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Congress Acts to Mitigate COVID-19 Impact

March 18, 2020 | Blog | By Anthony DeMaio, William Kannel, Leonard Weiser-Varon

Below is an update on legislative efforts by Congress and the White House to address the coronavirus pandemic, prepared by our D.C. colleagues at ML Strategies, who are closely following these fluid and fast-moving developments. Efforts to provide a supply of low cost working capital to the many businesses and entities experiencing operational and/or cash flow disruption may be of particular interest to our bondholder clients.
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Are Bankruptcy Blocking Provisions in Corporate Governance Documents Enforceable?

October 24, 2019 | Blog | By Paul J. Ricotta

Many equity sponsors are both shareholders and lenders to their portfolio companies.  In that hybrid case, where the shareholder is also a creditor, can the shareholder enforce corporate governance provisions which restrict the ability of the company to file for bankruptcy?  A recent decision from the Fifth Circuit Court of Appeals has answered that question in the affirmative - with caveats. 
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