Plans of Reorganization

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

Could the US already be in a recession?  [USA Today; June 25, 2019]

Puerto Rico’s Financial Oversight and Management Board proposes bankruptcy plan framework that would cut debt payments by half over the next 30 years [CNBC; June 16, 2019]

As part of proposed agreement between CFPB, attorneys general from 43 states and defunct for-profit

The question of whether a debtor’s plan of reorganization can include non-consensual releases for non-debtor parties has been hotly contested for several years, with circuit courts oftentimes split.  In his recent decision on the topic in the Aegean case,  New York Southern District Bankruptcy Judge Michael E. Wiles explored the limitations on such releases even

In less than 24 hours beginning on May 1, 2019, Sungard Availability Services Capital, Inc., and its affiliates (collectively, “Sungard”) commenced and completed Chapter 11 proceedings in what has been described as the fastest Chapter 11 case ever. Sungard filed its Chapter 11 cases just before 9pm on May 1 in the Bankruptcy Court for the Southern District of New York, White Plains Division, and, before 6pm the next day, Judge Robert Drain entered an order confirming Sungard’s prepackaged Chapter 11 plan.[1] The Sungard debtors were able to obtain this rapid result through extensive pre-filing planning and negotiations, and likely also benefited from assignment of their cases to Judge Drain, who had prior experience in addressing similar, expedited pre-packaged cases.[2]
Continue Reading Short-Order Reorganization: Sungard’s 24-hour Bankruptcy Case