Bankruptcy & Restructuring
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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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Hospitals Remain Stressed, But Don't Blame the ACA (Modern Healthcare)
August 21, 2015 | Blog | By Daniel S. Bleck
Dan Bleck was quoted in the Modern Healthcare article “Hospitals remain stressed, but don’t blame the ACA” addressing the misconception that the Affordable Care Act is the reigning force pushing healthcare providers into bankruptcy.
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363 Sale Denied because Secured Creditor not Paid in Full from Proceeds
August 3, 2015 | Blog | By Eric Blythe
A Delaware bankruptcy court held in In re Ferris Properties, Inc. that the debtors could not sell their property free and clear of the secured lender’s mortgages because the lender would not be paid in full from the proceeds of the sale. Specifically, the Court held that the lender could not be compelled to accept a money satisfaction of its interests under section 363(f)(5), and that the lender did not consent to the sale under section 363(f)(2).
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Bankruptcy Settlements may not have to Comply with the Absolute Priority Rule
July 21, 2015 | Blog | By Eric Blythe
In the recent Third Circuit decision in In re Jevic Holding Corp. the Court of Appeals ruled that, in rare circumstances, settlements in bankruptcy cases can be approved even if they result in junior creditors receiving a distribution before senior creditors are paid in full (i.e., even if the settlement violates the "absolute priority rule").
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Did The Supreme Court Finally Explain Stern? Examining the Wellness of Bankruptcy Court Jurisdiction
July 21, 2015 | Blog
The Supreme Court has spoken once again on the limited jurisdiction of the bankruptcy courts, adding to the understanding derived from previous cases. Wellness International Network, Ltd., et al. v. Sharif is the Supreme Court’s sixth significant case exploring bankruptcy court jurisdiction under the Bankruptcy Code.
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Quadrant Court Further Defines Creditor Derivative Standing for Breach of Duty Claims
July 21, 2015 | Blog | By Chip Phinney
The Delaware Court of Chancery recently held that, for a creditor to have standing to bring a derivative breach of fiduciary duty action, the creditor need only establish that the corporation was insolvent at the time the creditor’s action was filed—not that the corporation continued to be insolvent until the date of judgment.
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What to Make of a Diminished Thing: Tobacco Bond Defaults and Restructurings
March 11, 2015 | Advisory
There is little poetry in tobacco bonds these days. Cigarette consumption has declined beyond projections, and the advent of e-cigarettes may exacerbate the decline.
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Potential Shareholder Liability Arising From Subsidiary WARN Act Violations
March 2, 2015 | Advisory | By Eric Blythe
When a company begins experiencing financial difficulty, shareholders often ask whether they may be liable under the Federal Worker Adjustment and Retraining Notification (“WARN”) Act for violations by the company.
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Trademark Licensees May Be Protected in a Licensor’s Bankruptcy Even After a “Free and Clear” Sale
December 19, 2014 | Advisory | By Eric Blythe
The Bankruptcy Code generally permits intellectual property licensees to continue using licensed property despite a licensor’s bankruptcy filing. However, because the “intellectual property” definition in the Bankruptcy Code does not include “trademarks,” courts have varied on whether trademark licensees receive similar protection.
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Business Judgment Rule Protects Board's Decision to Maximize the Value of an Insolvent Delaware Corporation Even If It Puts Creditors at Risk; But It Does Not Protect Transfers of Value from the Corporation to a Controlling Shareholder or Related Party
October 31, 2014 | Alert | By Chip Phinney
Directors of an insolvent corporation face a host of difficult questions. Should they wind up operations or file for bankruptcy to preserve assets for creditors, or chart a riskier course that could lead the company back to profitability and possibly create value for shareholders?
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Another Court Rules That Availability of Make-Whole Premiums in Bankruptcy Depends on Governing Documents
September 15, 2014 | Advisory | By Eric Blythe
In a recent bench decision in In re MPM Silicones, LLC et al., Case No. 14-22503-RDD (Bankr. S.D.N.Y. August 26, 2014), the Bankruptcy Court considered bondholders’ right to recover make-whole premiums (premiums paid for early repayment of debt) upon the payment of accelerated debt following the borrower’s bankruptcy default.
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Did The Supreme Court Finally Explain Marathon And Stern? Executive Benefits’ Impact on Bankruptcy Court Jurisdiction
June 27, 2014 | Advisory | By Eric Blythe, Richard Mikels
The Supreme Court has spoken once again on the limited jurisdiction of the bankruptcy courts, adding to the understanding derived from Northern Pipeline Constr. Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982), Granfinanciera v. Nordberg, 492 U.S. 33 (1989), Langenkamp v. Culp, 498 U.S. 42 (1990) and Stern v. Marshall, 131 S. Ct. 2594 (2011).
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Equity Begets Flexibility: Valuing a Secured Creditor’s Claim in Bankruptcy and Allocating Post-Petition Interest
June 13, 2014 | Advisory | By Eric Blythe
The First Circuit Court of Appeals in In re SW Boston Hotel Venture, LLC, 2014 U.S. App. LEXIS 6768 (1st Cir. Apr. 11, 2014) recently ruled on a number of issues critical to valuing a secured claim in bankruptcy.
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Where Do Your Interests Lie Under Chapter 15 of the Bankruptcy Code? Determining a foreign debtor’s “center of main interests” and its effect on creditors’ rights
April 30, 2013 | Advisory | By Eric Blythe
When doing business with a foreign company, it is important to identify the company’s “center of main interests” (“COMI”) as creditors may find themselves bound by the laws of the COMI locale.
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