Financial Restructuring & Insolvency

  • Taxation of Restructuring Profits in Germany - Tax Administration and Legislator Swiftly React to a Recent Detrimental Decision of the German Federal Fiscal Court

    5 May 2017
    A recent decision by the German Federal Fiscal Court (BFH) has caused significant concerns in the restructuring community because it will severely complicate future restructurings in Germany or even make them impossible overall.
  • Roust’s Rapid Road to Confirmation: Confirmation of a Prepackaged Plan in the Southern District of New York in Less Than a Week—Have the Floodgates Opened?

    31 Jan 2017

    In less than a week after its bankruptcy filing, a debtor was able to obtain confirmation of its prepackaged plan of reorganization in the Bankruptcy Court for the Southern District of New York. In allowing the case to be confirmed on a compressed timeframe that was unprecedented for cases filed in the Southern District of New York, the Bankruptcy Court held that the 28-day notice period for confirmation of a chapter 11 plan could run coextensively with the period under which creditor votes on the plan were solicited prior to the commencement of the bankruptcy case.

  • Appeals Court Overturns Marblegate, Citing Analysis by Shearman & Sterling Partner

    18 Jan 2017

    The law on debt restructurings and liability management transactions is back to where it was. Yesterday, the 2nd Circuit Court of Appeals reversed the controversial District Court decisions in the Marblegate-Education Management bondholder litigation. The case attracted wide-spread attention in financial markets. The District Court interpreted the non-impairment provision in section 316(b) of the Trust Indenture Act, a Depression-era statute governing bond indentures. The provision prohibits a bondholder’s right “to receive payment” of principal and interest on the respective due dates expressed in the bonds from being “impaired or affected” without the bondholder’s consent. According to the District Court, the provision prohibited not just amendments to payment terms, but also other transactions that affected a bondholder’s practical ability to recover–at least when they occurred in connection with a “debt restructuring.”

  • EFIH Noteholders Find Redemption for the Payment of Make-Whole Premiums

    21 Nov 2016

    On November 17, 2016, the United States Court of Appeals for the Third Circuit issued a decision in which it held that holders of first lien notes and second lien notes of Energy Future Intermediate Holding Company LLC and EFIH Finance Inc. (together, “EFIH”) are entitled to payment of make-whole claims. In its reversal of the Delaware Bankruptcy Court and Delaware District Court, the Third Circuit focused largely on the distinction that the payment in question was tied to a “redemption” of the bonds, and was not a “prepayment” premium. The Third Circuit held, among other things, that while a premium based on “prepayment” cannot take effect after the debt’s maturity upon an automatic acceleration, a premium tied to a “redemption” before a fixed date is unaffected by the acceleration of the debt’s maturity. 

  • Halbhuber Authors Opinion Piece on Congressional Intent in Debt Restructurings

    26 Sep 2016
    Counsel Harald Halbhuber (New York-Capital Markets) wrote an opinion piece, titled “Congress Never Intended Windfall for Bond Holdouts,” that was published by Forbes on September 23.
  • FINRA Capital Acquisition Broker Proposal Approved

    20 Sep 2016

    In August 2016, the SEC approved FINRA’s proposal to permit firms conducting only enumerated corporate financing activities (“capital acquisition brokers” or “CABs”) to operate under a more limited FINRA rule set, a move intended to relieve those limited purpose firms from certain regulatory burdens. The implementation date will be no later than February 14, 2017.

  • Court of Justice of the European Union Confirms Validity of the European Commission’s 2013 Banking Communication on State Aid

    9 Aug 2016

    In its judgment of 19 June 2016, the Court of Justice of the European Union confirmed that the European Commission’s 2013 Banking Communication is not contrary to EU law. The Court clarified that the burden-sharing requirements do not apply automatically and that in exceptional cases the Commission could approve State aid which does not meet the conditions of the Banking Communication. The judgment also endorses the cross border recognition of regulatory measures effecting burden-sharing.

  • Judge Chapman Flips the Script

    9 Aug 2016

    On June 28, 2016, in what essentially was a clean sweep for the noteholder and trust certificate holder defendants (the “Noteholders”), the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) granted an omnibus motion to dismiss Lehman Brothers Special Financing, Inc.’s (“LBSF”) adversary proceeding which sought the avoidance and recovery of various Noteholder distributions.  In addition to rejecting Judge Peck’s “singular event theory,” Judge Chapman also found that the flip-clause provisions at issue were not unenforceable as argued by LBSF, and that regardless, all related collateral distributions were covered by the Bankruptcy Code’s safe harbors for financial contracts.

  • Financially Distressed Companies Answer Book 2016

    22 Jun 2016
    Partner Douglas Bartner (New York- Financial Restructuring & Insolvency) has just released the newly updated Financially Distressed Companies Answer Book 2016 for the Practising Law Institute (PLI). The book provides a comprehensive treatment in a convenient Q&A format of issues faced by management, vendors and creditors dealing with financially distressed companies.
  • Delaware Bankruptcy Court Invalidates on Public Policy Grounds a “Golden Share” Provision in LLC Agreement Designed to Limit LLC’s Ability to File for Bankruptcy

    17 Jun 2016
    In a June 3, 2016 decision, the United States Bankruptcy Court for the District of Delaware (“the Bankruptcy Court”) invalidated, on federal public policy grounds, a provision in the debtor-LLC’s operating agreement that it viewed as hindering the LLC’s right to file for bankruptcy.
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