The Wall Street Journal reports on a bankruptcy court’s decision to grant a student borrower’s request to erase his student debt [WSJ; Jan.8, 2020]

Bloomberg article discusses new loopholes in CLO documents, giving managers more control, and sparking an investor backlash [Bloomberg; Jan. 23, 2020]

PG&E reaches bankruptcy deal but, as the New York Times reports, Governor Newsom isn’t so sure [NYT; Jan. 23, 2020]

On December 19, 2019, the US Court of Appeals for the Third Circuit held in In re Millennium Lab Holdings II, LLC1 that bankruptcy courts have the constitutional authority, well within the constraints of Stern v. Marshall,2 to confirm Chapter 11 reorganization plans containing nonconsensual third-party releases. This decision is notable not only because it is the first federal circuit court of appeals decision addressing (and overruling) a Stern challenge to a bankruptcy court’s authority to approve such releases but also because it was issued in a circuit where the ability of a plan to otherwise provide for nonconsensual releases of third-party claims is already generally recognized.3

Continue Reading Third Circuit Holds Bankruptcy Courts May Constitutionally Confirm a Chapter 11 Plan Containing Nonconsensual Third-Party Releases

Mayer Brown advised on two transactions – “Restructuring of the Year” in the $1 billion to $10 billion category, and “Chapter 11 Reorganization of the Year” in the $500 million to $1 billion category – that were honored by The M&A Advisor in its 14th Annual Turnaround Awards. The annual awards recognize the leading distressed transactions, restructuring, refinancings, products and services, firms, and professionals in the US and international markets.

Read more here.

On November 26, 2019, the US Court of Appeals for the Fifth Circuit held in Ultra Petroleum Corp. v. Ad Hoc Committee of Unsecured Creditors of Ultra Resources1 that the US Bankruptcy Code limits in certain respects the right of creditors to enforce contractual claims for a “make-whole” premium owed under a note agreement as the result of the debtor’s prepayment of the notes. The Ultra Petroleum case may ultimately lead to a decision addressing the unresolved questions of whether, and in what circumstances, a claim for a make-whole premium must be disallowed as “unmatured interest” under Section 502(b)(2) of the Bankruptcy Code.

Continue Reading US Bankruptcy Code Defines Right to Receive “Make-Whole” Premium under Chapter 11 Plan

Prepayment premiums (also referred to as make-whole premiums) are a common feature in loan documents, allowing lenders to recover a lump-sum amount if a borrower pays off loan obligations prior to maturity, effectively compensating lenders for yield that they would have otherwise received absent prepayment.  As a result of the widespread use of such provisions, three circuit courts of appeal – the U.S. Court of Appeal for the Second, Third and Fifth Circuit – have recently had to address the enforceability of prepayment provisions in bankruptcy.  A quick review of these cases reveals a central theme: the enforceability of such a premium will likely turn on contract-specific language, and, in particular, whether the governing agreements specifically address payment following bankruptcy, including the effects of acceleration caused by bankruptcy.

Continue Reading Prepayment Premium/Make-Whole Enforceability in Bankruptcy: The Details Matter

Mayer Brown strengthens its restructuring practice with the additions of Adam Paul and Louis-Chiappetta [Mayer Brown; Aug. 2, 2019/Aug. 26, 2019]

The Wall Street Journal reports on a new uptick in oil and gas bankruptcies as new concerns arise in the industry [WSJ; August 30, 2019]

U.S. economy adds only 130,000 jobs in August, disappointing economists who had predicted greater growth [Washington Post; Sep. 6, 2019]

OxyCotin maker Purdue Pharma LP prepares for free-fall bankruptcy filing if it can not reach settlement over widespread opioid litigation [Reuters; Sep. 6, 2019]

Brazil’s Odebrecht Files for Bankruptcy in U.S. [WSJ; August 26, 2019]

Ditech plan rejected as judge finds that company can’t sell mortgage-servicing rights and reverse-mortgage business free and clear of consumer claims [Bloomberg; August 28, 2019]

First annual upturn in corporate insolvencies globally, since the financial crisis, with marked upturn in North America in particular [Atradius; August 27, 2019]

U.S. Second-Quarter Growth Revised Down to 2% Pace [Bloomberg; August 29, 2019]

In recent weeks, the dispute in Windstream’s bankruptcy between Windstream and its REIT spinoff Uniti Group over the lease transaction that ultimately led to Windstream’s chapter 11 bankruptcy has continued to escalate with Windstream filing an adversary complaint against Uniti.  In its complaint, Windstream seeks to recharacterize the lease as a disguised financing alleging that the lease resulted in a long-term transfer of billions of dollars to Uniti to the detriment of Windstream’s creditors. The debtors’ complaint also alleges that they were insolvent no later than the third quarter of 2017, and argues that the above-market rent payments and tenant capital improvements they were required to make under the lease constitute constructively fraudulent transfers, as the debtors have not received reasonably equivalent value under the lease.

Continue Reading Windstream Lease Dispute Escalates as Debtors Sue Uniti, Mediator Appointed, and Creditors Intervene

Bloomberg reports on slowing U.S. growth as trade wars weigh on businesses [Yahoo News, Bloomberg; July 26, 2019]

Windstream’s dispute with its REIT spinoff Uniti heats up, as Windstream seeks to recharacterize its $650 million-per-year lease agreement with Uniti as a disguised financing [Law360; July 25, 2019]

Virginia congressman’s bill on small business bankruptcy reform heads for Senate vote with bipartisan support [Radio WVTF; July 25, 2019]

Luxury department store chain Barney’s prepares for possible bankruptcy filing [CNBC; July 25, 2019]

Experts predict recession no later than second half of 2020 [Fox Business; July 25, 2019]

Economists find that higher inflation target by the Fed ahead of the 2008 recession likely would have resulted in a substantially faster recovery [WSJ; July 25, 2019]