In an exclusive Q&A with ABF Journal publisher Jerry Parrotto and New York Institute of Credit managing director Harvey S. Gross, U.S. Bankruptcy Judge Michael B. Kaplan shares his thoughts on corporate restructuring in the post-credit crisis environment.
Bankruptcies of major shipping companies over the last few years have furnished guidelines for conducting a successful reorganization and restructuring. Blank Rome’s Stephen T. Whelan and Marc E. Richards identify a few pitfalls and positive lessons to be gleaned from these recent cases.
The First Circuit’s decision in Malley v. Agin highlights an ongoing conflict among the federal circuit courts regarding the scope, nature and extent of the bankruptcy court’s equitable powers under §105(a) of the Bankruptcy Code. While the issue cries out for a definitive ruling by the U.S. Supreme Court, it is uncertain when and if one of these cases will reach the high court because the dollar amounts involved are often modest, as this case illustrates.
When law firm Dewey & LeBoeuf filed for Chapter 11 protection, it was obligated to its secured creditors, among many others, led by JP Morgan on a $75 million line of credit facility. Jeffrey Wurst explains what led to Dewey’s collapse and offers advice regarding key indicators of a potential creditor’s fiscal irresponsibility.
While the bankruptcy process is a useful tool for selling a company’s distressed assets, it can come at a significant cost. Lately, more often than not, many creditors, lenders and companies are opting to try an out-of-court approach. Lincoln International’s Joseph Radecki and Jason Solganick discuss the pros and cons to selling distressed assets both in the bankruptcy process and in out-of-court situations.
In re Pitt Penn Holding Co., Inc. clarifies that even in a court of equity and despite colorable claims of concealment on the part of an avoidance-action defendant, there are limitations on the power of a bankruptcy court to invoke the doctrine of equitable tolling. In the following article, Haben Goitom from the Business Restructuring and Reorganization practice at Jones Day provides great detail.
Speculating on “bad debt” dates back to colonial times when investors purchased individual claims at a fraction of their value against the strapped colonies with the hopes that the new government would eventually pay the claims in full. While much has changed since then, bankruptcy claims trading is still in practice by sophisticated investors with the acumen to estimate the timing and amount of payment. For sellers, the practice can significantly expedite liquidity, yet it is not with risk.
Although borrowers in multiple-debtor cases may still attempt to exact leverage against their creditors under the Per-Plan Cases, courts in all jurisdictions should be reluctant to apply an analysis inconsistent with Jameson and Tribune in light of the easily distinguishing characteristics of each of the Per-Plan Cases. Dechert attorneys Michael Sage and Brian Greer note lenders should be prepared in circumstances when they are the only creditor whose vote could be solicited on a debtor’s plan of reorganization to act aggressively. Such lenders should consider, among other things, seeking the immediate dismissal of the debtor’s Chapter 11 case, relief from the automatic stay, and termination of the debtor’s exclusive period to file a Chapter 11 plan.
For this year’s Bankruptcy Issue, ABF Journal and the New York Institute of Credit are pleased to present Judge Kevin J. Carey’s perspective on the shifting dynamics and new realities occurring in Chapter 11 process for middle-market companies.
The U.S. District Court for the District of Arizona recently issued an opinion in the bankruptcy case of Avondale Gateway Center Entitlement (the debtor) affirming a bankruptcy court decision holding that the contractual subrogation, through a subordination agreement, of a senior secured lender to the rights of a junior secured lender authorized the senior lender to vote on the debtor’s Chapter 11 plan of reorganization on behalf of the junior lender.