Plans of Reorganization

Various creditor constituencies in the Purdue Pharma bankruptcy case have requested access to financial information concerning foreign affiliates controlled by the Sackler family, reports the Wall Street Journal. The creditors contend that this information is critical in determining the creditors’ response to the current multi-billion dollar settlement offer being made by the Sackler family

The New York Times reports that natural gas extraction company Chesapeake Energy Corporation has sought chapter 11 bankruptcy relief in the United States Bankruptcy Court for the Southern District of Texas. Chesapeake’s bankruptcy is reportedly the largest bankruptcy of a United States oil and gas company since 2015 (N.Y. Times; June 29, 2020)

German fintech

PG&E Corp. received approval from the United States Bankruptcy Court for the Northern District of California to sell $20 billion worth of new debt and equity, reports the Wall Street Journal. Approximately $10.7 billion worth of both investment grade and high-yield bonds will be issued and the company is seeking to find investors to

J.C. Penney Company, Inc. is the latest retailer to file for chapter 11 bankruptcy, reports CNN. Although the COVID-19 pandemic played a role in the 118-year old retailer’s decision to file for bankruptcy protection, the company has struggled for nearly a decade to overcome slumping sales and profits. The company has reportedly obtained agreement

Two recent decisions from Delaware illustrate somewhat divergent views from the bankruptcy bench on the proper procedures for obtaining non-debtor releases in confirmed plans of reorganization. In both In re Emerge Energy Services LP, et al.1 and In re Cloud Peak Energy Inc., et al.2 the debtors’ initial, and then certain subsequent, efforts at plan confirmation were stymied by proposed opt-out procedures. Ultimately, both debtors were able to confirm their plans after adjusting the applicable release provisions, as described below. Collectively, these decisions demonstrate how closely many courts will scrutinize non-debtor releases and the importance of designing procedures for obtaining consent to such releases that demonstrate that they are procedurally fair.

Continue Reading Recent Delaware Decisions Show Divergent Views on Third-Party Release Procedures

Law360 reports that Purdue Pharma LP is seeking a 180-day extension of a preliminary injunction put in place earlier in the bankruptcy process that halted litigation relating to Purdue’s role in the national opioid crisis not only against the debtors themselves but also against the debtors’ current and former owners, officers, directors, employees, and associated

Law360 reports that Bar Louie secured approval for its sale procedures on Thursday, February 27, 2020. Judge Mary Walrath of the United States Bankruptcy Court for the District of Delaware approved the sale procedures after cutting the stalking horse bidder’s breakup fee by $1.4 million and eliminating a 1% reimbursement fee intended to be paid

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

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

The Momentive Performance Materials bankruptcy resulted in a number of disputes on issues germane to bankruptcy practitioners, including on intercreditor agreements (as we wrote about here), the enforceability of makewhole premiums and the proper interest rate in the context of a Chapter 11 cramdown plan.  On that third issue, Judge Drain entered an order on remand in April addressing the proper cram-down rate for two classes of senior noteholders that had been issued replacement notes under Momentive’s Chapter 11 plan. Given the notices of appeal filed just days later, it looked like another round of appellate review might occur.  But on May 15, Momentive announced that it had elected to refinance those notes, resulting in a voluntary dismissal of the appeals.

Continue Reading Replacement Financing Ends Momentive Cram-Down Rate Fight