Archives: U.S. Bankruptcy & Commercial Restructuring

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Reed Smith Prepares Enforceability Opinion for IECA New Master Netting Agreement

On October 7, 2016, Reed Smith assisted the International Energy Credit Association (“IECA”)  in preparing an enforceability opinion for the release its Master Netting Agreement (the “MNA”) under both English and U.S. law.1 The MNA is billed as a state-of-the-art solution designed to manage the termination, close-out, and netting of both physical and financial transactions, including in the … Continue Reading

Troubled Waters: The Raging Storm over Safe Harbors

A pair of recent decisions adds more fuel to the debate over forum shopping by debtors.  This time the issue involves application of the Bankruptcy Code’s safe-harbor provision in section 546(e).  Conflicting interpretations by the courts in several circuits are undermining the certainty that was intended to protect financial markets and creating jurisprudence that varies … Continue Reading

Second Circuit Raises a Caution Flag for Sales Free-and-Clear of Claims

The power of a bankruptcy court to authorize the sale of assets “free-and-clear” of liens and any other interests is a powerful tool that is used to realize value from distressed businesses.  Indeed, purchasers will occasionally insist that sellers file a chapter 11 case in order to “cleanse the assets” by conducting their sale under … Continue Reading

Lehman Court Changes Course on Flip Provisions and Financial Safe Harbors

A Flip on the Flip Clause: New York bankruptcy judge dismisses claims to recover approximately $1 billion that had been distributed to noteholders following commencement of the Lehman Brothers chapter 11 proceedings in September 2008. To continue reading more about the re-examining the controversial decision of Lehman Bros. Special Fin. Inc. v. BNY Corp. Trustee … Continue Reading

To submit or not to submit – questions of jurisdiction

This appeal arose out of the litigation fallout from the Bernard Madoff Ponzi scheme. In the appeal, the Privy Council considered whether, at common law, an agreement to submit to jurisdiction must be express or whether it could be implied or inferred. The Board of the Privy Council found that an agreement to submit to … Continue Reading

January Newsletter

Reed Smith’s global Commercial Restructuring & Bankruptcy team have recently published the January issue of their quarterly newsletter. The newsletter provides a detailed review of some of the most important legal developments in the sector.  The January issue includes the following: In this Issue: Deed-In-Lieu, or Not Ninth Circuit Reverses Lower Courts, Finds Substantially Completed Plan Is … Continue Reading

New York Law Governed Bonds are Sufficient “Property” for U.S. Bankruptcy Court Jurisdiction

To qualify as a “debtor” under the U.S. Bankruptcy Code, an entity must reside, have a place of business or property in the U.S. It is common for non-U.S. entities that file for chapter 11 protection to rely on the “property” element of §109(a). Property has traditionally been widely construed, with it now being commonly … Continue Reading

Hudson Energy Denied Administrative Priority for Electricity Sold Pre-Bankruptcy

In a September 18, 2015 order, the U.S. District Court for the Southern District of New York affirmed a bankruptcy court order denying administrative claim treatment to Hudson Energy Services, LLC (“Hudson”) for its retail sales of electricity to the debtor.1 The decision does not address any “safe-harbor” or forward contract issues, but is among … Continue Reading

District Court Confirms Netting/Setoff Practices

In a recent decision related to the SemCrude bankruptcy, the federal district court upheld the Bankruptcy Court’s rulings on the efficacy of certain common risk-mitigation tools used in the energy trading and marketing business – namely product payment netting and cross-product setoff upon liquidation and closeout. The decision comes amid long-running challenges from producers who … Continue Reading

Schemes of Arrangement for Distressed Shipping Companies – a viable (and cheaper) alternative to chapter 11?

While it is clear that chapter 11 of the U.S. Bankruptcy Code can be an effective tool of reorganisation for distressed foreign shipping companies that are locked in an adversarial dispute with their creditors, should an English scheme of arrangement be considered as an alternative to a U.S. bankruptcy case for shipping companies that are … Continue Reading

Third Circuit: Only in a ‘Rare Case’ May a Case Arising Under Chapter 11 Be Resolved In a ‘Structured Dismissal’ That Deviates from the Bankruptcy Code’s Priority System

The Court of Appeal has just decided a “novel question of bankruptcy law: may a case arising under chapter 11 ever be resolved –in a ‘structured dismissal’ that deviates from the Bankruptcy Code’s priority system?” In its May 21, 2015, Opinion, it held in a “rare case, it may.” In re Jevic Holding Corp. (3d … Continue Reading

May Newsletter

Reed Smith’s global Commercial Restructuring & Bankruptcy team have recently published the May issue of their quarterly newsletter. The newsletter provides a detailed review of some of the most important legal developments in the sector.  The May issue includes the following: How Safe are the Bankruptcy Code Safe Harbors? Stockton’s Chapter 9 Plan Approval Delaware Chancery … Continue Reading

Safe Harbors and Securitizations: Loan Payments in Connection with a Commercial Mortgage-Backed Securitization Protected from Clawback under the U.S. Bankruptcy Code Safe Harbors

In Krol v. Key Bank National Association, et al. (In re MCK Millennium Centre Parking, LLC), Adv. No.14-00392 (N.D. Ill. Apr. 24, 2015), the U.S. Bankruptcy Court, Northern District of Illinois (the “Court”) issued a decision of particular importance to lenders and securitization servicers facing complications from the bankruptcy of a borrower involved in a … Continue Reading

Bankruptcy “Essentials” in a Low-Price Environment

In the latest EIA STEO Report (April 2015), the DOE projects oil prices for WTI to remain around or below $60 per barrel for the balance of 2015 and grow to $70 per barrel in 2016. In this environment of excess supplies and relatively low prices, many believe in the likelihood of an increase in … Continue Reading

Delaware Joins the 7th and 9th Circuits in Protecting Trademark License Owners from Non-consensual Bankruptcy Assumptions and Assignments

The bankruptcy court in Delaware recently joined a number of bankruptcy courts in other jurisdictions protecting trademark owners’ rights to prohibit a debtor from either assuming or assigning a trademark without the trademark owner’s consent. In In re Trump Entertainment Resorts, Inc., Case No. 14-12103 (Feb. 20, 2015, Bankr. D. Del.), the casino operator Debtors … Continue Reading

Trump Taj Mahal Fined Record $10 Million for Inadequate AML Program

As disclosed recently in a bankruptcy court filing, on January 27, 2015, the Financial Crimes Enforcement Network (“FinCEN”) imposed a $10 million civil money penalty pursuant to the Bank Secrecy Act (the “BSA”) on Trump Taj Mahal Associates LLC. Trump Taj Mahal consented to the imposition of the penalty (subject to the bankruptcy court’s approval) … Continue Reading

Oil Price Decline: Positioning for Turnaround or Sale

As a reaction to the dramatic oil price volatility, many energy companies plan to streamline operations by reducing work force and shedding assets. Those who do so face tightening credit and decline in asset value that may impact the solvency of the business enterprise. Energy companies must maintain operations where possible to preserve value and … Continue Reading

February Newsletter

Reed Smith’s global Commercial Restructuring & Bankruptcy team have recently published the February Edition of their quarterly newsletter. The newsletter provides a detailed review of some of the most important legal developments in the sector.  The February issue includes the following: Minority Holders Gain Leverage Through Recent Interpretation of Trust Indenture Act New Jersey Joins Number … Continue Reading

October Newsletter

Reed Smith’s global Commercial Restructuring & Bankruptcy team have recently published the October Edition  of their quarterly newsletter.  The newsletter provides a detailed review of some of the most important legal developments in the sector.  The October edition covers diverse areas from the use of schemes of arrangements in England to attorney-client privilege issues in … Continue Reading

Welcome to Reed Smith’s Global Restructuring Watch Blog

If you’re reading this, you understand the necessity of keeping up-to-date on global restructuring trends and developments. Reed Smith’s global restructuring group is known worldwide as one of the premier practices focusing on complex financial restructurings, workouts, bankruptcies, insolvencies and other matters involving financially distressed transactions. We represent clients in the United States, the United … Continue Reading

Madoff Trustee’s Clawback Reach Cut Short

Foreign investors who are concerned about the extraterritorial application of U.S. bankruptcy law can draw some comfort from a recent decision in the liquidation case of Bernard L. Madoff Investment Securities (“BLMIS”).  On July 6, 2014, United States District Court Judge Jed S. Rakoff ruled that the BLMIS Trustee could not use the Bankruptcy Code’s … Continue Reading
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