Debtor Employee Retention and Incentive Compensation Programs

Bankruptcy Code section 503(c) severely limits a debtors ability to pay management retention bonuses, severance, and other amounts. Holding on to valuable employees during a bankruptcy case can be a daunting task, and this Emerging Issues Analysis offers specific best practices guidelines for corporate...

Fewer Restructurings and More Liquidations in Southern District of New York

Under the theory that old news is still good news, I’m pleased to report that Collier International Business Insolvency Guide expert author Stephen Z. Starr, of Starr & Starr PLLC, was quoted in the January 11 New York Magazine Intelligencer column by Peter Savodnik. The article “Final...

PBGC v. Oneida Ltd.

Richard Levin, of Cravath, Swaine & Moore LLP, considers the significance of the first appellate decision holding that a company is liable to the Pension Benefit Guaranty Corporation for pension termination premiums after it emerges from a chapter 11 reorganization. Because of continuing obligations...

In re City of Vallejo, 403 B.R. 72; 2009 Bankr. LEXIS 705 (Bankr. E.D. Cal. Mar. 13, 2009)

John Gallagher & Todd Duffield, of Paul, Hastings, Janofsky & Walker LLP, consider the ruling by a California bankruptcy court that a chapter 9 debtor is not bound by the requirements of Code section 1113 or any state law in rejecting a collective bargaining agreement. The decision, however,...

Chrysler Files Bankruptcy - Part I: Assessing The Financial Carnage

And so, with these fighting words by President Obama, Chrysler files for bankruptcy in the Bankruptcy Court for the Southern District of New York. Clearly, we're in uncharted waters as never has the Office of the President become so engaged in the restructuring of America's largest businesses...

Chrysler Files Bankruptcy - Part II: Testing The Limits Of Section 363 Sales

" Be careful what you wish for ," the old saying goes, and so too for those who wished for Chrysler to file for bankruptcy in order to achieve their objectives. Chrysler and all its major constituents will argue that the house is on fire and absent a quick sale on the agreed-upon terms ( well...

Chrysler Bankruptcy Analysis - Part III: Will The "Absolute Priority Rule" Kill The Sale?

Well, the initial pleadings have been filed, and Chrysler's argument is essentially that it's a "dead man walking." In it's opening memorandum of law in support of its motion to approve the sale , Chrysler argues that if the "sale" doesn't close on the accelerated...

Objecting to the GM 363 Sale's Treatment of Product Liability Claims: Stepping Into The Fray

In today's depressed environment, Howard Beale's famous rant in Network --the 1976 movie that took several academy awards against stiff competition ( Rocky, All the President's Men, and Taxi Driver )--sure reads like something that could have been written today: I don't have to tell...

Out of the Fray ... Onto the "Slow Boat to China": Putting the Brakes on the GM Bankruptcy Appeal

Three weeks ago, as I discussed here , I jumped into the GM fray and filed this objection on behalf 5 product liability claimants who, absent the "free and clear" sale protections sought by GM under Section 363, would have had the right to add the Purchaser as an additional defendant to their...

Voyage of the Damned: The GM Tort Claimants' Opening Appellate Brief -- Brother, Can You Spare a Quarter?

What started out a couple months ago as a " Slow Boat to China ," today feels more like the " Voyage of the Damned ." Yesterday I filed this " Opening Brief " (plus the Sale Opinion at Appendix A and the Sale Order and MPA at Appendix B ) on behalf of my five clients...

Distressed Acquisitions: Brave New World or Variation on a Familiar Theme?

Distressed M&A activity continues to be one of the most active segments of the deal market despite signs of improvement in the economy and recovery in the credit markets. Discussions of rights plans and "go shops" are being replaced by fraudulent conveyance risk, 363 sales and plans of...

Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC), 391 B.R. 25 (B.A.P. 9th Cir. 2008)

Channel Outdoor, Inc. v. Knupfer, a case from the bankruptcy appellate panel for the Ninth Circuit that found that outside a plan of reorganization, 11 U.S.C. § 363(f) does not permit a secured creditor to credit bid its debt and purchase estate property, taking title free and clear of valid, nonconsenting...

The Saab Reorganization in Sweden: The Expedited and Successful Restructuring and Sale of a Global Automobile Manufacturer

In this Emerging Issues commentary, authors Patrick E. Mears, John T. Gregg and Mathias Winge discuss Saab Automobile AG, a foreign subsidiary of General Motors. This company filed for reorganization in Sweden in February of 2009 under Sweden's Reorganization of Business Act. The authors talk about...

Number of Prepackaged Bankruptcy Filings Tripled in 2009

According to an analysis from BankruptcyData.com , the number of prepackaged bankruptcy filings has tripled in the past year. There were 30 such filings in 2009, as compared to only 10 in 2008. In a prepackaged bankruptcy, the debtors and certain required majorities of each class of creditors and...

Blockbuster: Going Bust?

Many of us with kids of a certain age know the Friday night ritual: take the kids to Blockbuster to rent a movie. That era may be going away as companies find that they no longer need expensive bricks and mortar stores to rent movies. Next up for Blockbuster regardless of the long term prognosis...

‘Stalking-Horse Lenders’ Must Proceed With Caution in Chapter 11 Cases

Acquisition of companies in bankruptcy has become prevalent and perhaps the model in Chapter 11 cases. But potential purchasers need to be aware of several pitfalls. I will address some of them here, and discuss others during our upcoming Webinar - Chapter 11 Reorganization: Hot Topics & Industry...

Twinkie Maker Hostess Seeks Liquidation as Deal with Unions Breaks Down

NEW YORK - (Mealey's) Twinkie maker Hostess Brands Inc., which had been proceeding with a bankruptcy reorganization plan, moved in the U.S. Bankruptcy Court for the Southern District of New York on Nov. 16 for authorization to convert its proceeding to Chapter 7, which would result in liquidation...

Claims Trading from the Inside Out: Ninth Circuit BAP Holds that a Non-Insider Claimant's Vote on a Plan Is Not Discounted Merely Because the Claimant Purchased Its Claim from an Insider

by Michael M. Lauter In an unpublished decision in In re The Village at Lakeridge, LLC , BAP Nos. NV-12-1456 and NV-12-1474 (B.A.P. 9th Cir. Apr. 5, 2013), the United States Bankruptcy Appellate Panel of the Ninth Circuit held that a vote on a plan of reorganization submitted by a non-insider claimant...

Supreme Court Will Not Hear Equitable Mootness Doctrine Appeal By Debenture Trust

WASHINGTON, D.C. - (Mealey's) The U.S. Supreme Court on April 29 denied a petition for certiorari in which a debenture trust company argued that the Second Circuit U.S. Court of Appeals inappropriately applied the doctrine of equitable mootness in affirming a bankruptcy court's decision that...

Third Circuit Rejects 3 More Appeals of W.R. Grace’s Reorganization Plan

PHILADELPHIA — (Mealey’s) The Third Circuit U.S. Court of Appeals on Sept. 4 in two opinions rejected challenges by Canada, Montana and a South Carolina hospital to Chapter 11 bankruptcy debtor W.R. Grace & Co.’s confirmed plan of reorganization, finding that the plan is equitable...

Auto-Hauler Allied Systems Holdings' Car Wreck of a Chapter 11 Case May Finally Be at an End

Many commentators have remarked that a “new normal” has evolved for Chapter 11 proceedings , wherein the major constituents negotiate the salient terms and exit strategy of the debtor’s restructuring prior to the filing of the bankruptcy petition, generally leading to shorter, less...

9th Circuit Vacates Asbestos Bankruptcy Reorganization; Says Trust Isn’t In Control

SAN FRANCISCO — (Mealey’s) The Ninth Circuit U.S. Court of Appeals on Oct. 28 vacated the bankruptcy reorganization plan for a former asbestos insulator, finding that the plan failed to satisfy the requirements of Section 524(g) of the Bankruptcy Code dealing with control by asbestos trusts...

Interesting ResCap FactOID – Court Rejects Effort to Disallow Portion of Bond Claims Based on “Original Issue Discount”

by Ben Feder In an opinion that will have a significant impact on the viability of debt for debt exchanges and out of court restructurings, Judge Martin Glenn of the U.S. Bankruptcy Court for the Southern District of New York has refused in the Chapter 11 case of Residential Capital LLC (“ ResCap...

Energy Future Holdings – Bidding Procedures Fight Highlights Conflicts Among Affiliated Debtors

by Ben Feder Energy Future Holdings (EFH), f/k/a TXU Corp., an energy company centered in Texas, was taken private in 2007 in the largest leveraged buyout transaction that has ever taken place . The deal was largely predicated on an anticipated rise in natural gas prices; when prices instead plummeted...