Forty-two state Attorneys General have signed on to a National Association of Attorneys General letter in support of H.R. 4421, which seeks to limit forum shopping in chapter 11 cases by limiting the jurisdiction in which a debtor may file to the jurisdiction where its principal assets are located or the jurisdiction where its principal assets are located. [NAAG; Feb. 20, 2020]

In U.S. v. Chesteen (In re Chesteen) the Fifth Circuit Court of Appeals recently held that a debt owed to the IRS under the Affordable Care Act’s shared responsibility payment provisions is not an excise tax entitled to payment priority under section 507(a)(8)(E)(I) of the Bankruptcy Code. [5th Cir.; Feb. 20, 2020]

The Second Circuit Court of Appeals recently issued a summary order in Marsh USA Inc. v. The Bogdan Law Firm (In re Johns-Manville Corp.) finding that the estate of an insulation worker could not seek compensation from an insurance company in Mississippi state court and was, instead, limited to seeking compensation from a trust established in 1986 in connection with Johns-Manville’s bankruptcy. The court determined that the future claims representative appointed in connection with the Johns-Manville bankruptcy adequately represented the worker’s interests, which resulted in a court order restricting the worker and other claimants from seeking compensation outside of the channeling trust structure. [2nd Cir.; Feb. 19, 2020]

Law360 reports that Boy Scouts of America is seeking a quick emergence from Chapter 11 that will allow it to preserve the organization’s mission while dealing with sexual abuse claimants fairly (likely through a channeling trust). Counsel to the Boy Scouts is currently seeking to channel the sexual abuse claims against Boy Scouts of America to the United States District Court for the District of Delaware. [Law360; Feb. 19, 2020]


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