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Aug 09, 2016

Judge Chapman Flips the Script

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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.

View full memo, Judge Chapman Flips the Script

Authors and Contributors

Fredric Sosnick

Partner

Financial Restructuring & Insolvency

+1 212 848 8571

+1 212 848 8571

New York

Joel Moss

Partner

Financial Restructuring & Insolvency

+1 212 848 4693

+1 212 848 4693

New York

Solomon J. Noh

Partner

Financial Restructuring & Insolvency

+44 20 7655 5795

+44 20 7655 5795

London

Ned S. Schodek

Partner

Financial Restructuring & Insolvency

+1 212 848 7052

+1 212 848 7052

New York