The financial crisis that profoundly impacted the US and global business communities in so many ways has made a particularly strong mark in the insolvency law arena, according to global law firm Shearman & Sterling’s new report, 2010 Bankruptcy Law: The Year in Review.

The report suggests that while the financial markets and the broader economy showed signs of recovery, the 2008 financial crisis continued to have a lasting impact, as significant case law decisions dealing with the events surrounding the crisis were handed down. In the Lehman Brothers bankruptcy proceedings, for example, previously untested derivative safe harbors were challenged in front of courts for the first time. In addition, secured creditors saw their credit bidding rights limited, which helped to embolden junior creditors, whose ranks often were filled by activist investors, to creatively use the cram down provisions of the Bankruptcy Code to force nonconsensual restructurings on senior lenders. And, finally, the Fifth Circuit rendered the first-ever court of appeals decision dealing with chapter 15.

“This definitely was an active year of court decisions that will help to shape the US restructuring practice for years to come,” said Fredric Sosnick, head of Shearman & Sterling’s Bankruptcy & Reorganization Practice. “In addition to all of the bankruptcy activity, 2010 was also a watershed year in the legislative arena. The rulemaking following from the Dodd-Frank Act introduced an entirely new insolvency regime for systemically significant financial entities that fundamentally changes the game, replacing chapter 11 with the Orderly Liquidation Authority for those entities.”

The Shearman & Sterling report has 12 chapters:

• Dodd-Frank and the Creation of an Orderly Liquidation Authority
• Developments in Secured Creditors’ Rights
• Debtor-in-Possession Financing
• Developments in Distressed Mergers and Acquisitions
• Gifts to Junior Classes in Plans of Reorganization
• Safe Harbor Contract Developments
• Disclosure Requirements Under Federal Rule of Bankruptcy Procedure 2019
• Claims
• Intellectual Property – Rejection of Trademark Licenses
• Modification of Retiree Benefit Plans
• Appointment of Examiner
• Cross-Border Restructuring – Chapter 15 Cases

Shearman & Sterling’s Bankruptcy & Reorganization Practice is considered an industry leader in the areas of US and international restructurings, recapitalizations and bankruptcies and has been recognized as such for decades. Drawing on the firm's strong corporate roots, the principal initial focus of the Bankruptcy & Reorganization Practice was on the representation of banks as creditors in work-outs and bankruptcy cases. Today the practice has expanded to cover all facets of bankruptcy work, including representations of distressed companies and chapter 11 debtors, creditor committees, banks and other creditors and buyers and sellers of distressed assets. The practice is international in scope, with its attorneys playing a leading role in restructurings and insolvencies in the United States and in established and emerging commercial centers around the world.