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Commercial Restructuring & Bankruptcy News - May 2015, Issue 2

In This Issue: - How Safe are the Bankruptcy Code Safe Harbors? - Stockton’s Chapter 9 Plan Approval - Delaware Chancery Court Clarifies Fiduciary Duties of Insolvent Corporation Directors in Derivative...more

Will Congress Finally Act? The ABI Commission on Business Bankruptcy Reform: Secured Lenders

Congress rarely accomplishes anything these days, but the need to reform Chapter 11 of the Bankruptcy Code seems to have “crossed over the aisle.” When the Bankruptcy Code was enacted in 1978, America boasted the world’s...more

New IRS Rulings Should Provide Greater Certainty for Corporate Restructurings

On May 5, 2015, the Internal Revenue Service (IRS) issued two long-awaited rulings, Rev. Rul. 2015-09 and Rev. Rul. 2015-10, that should ease the lives of corporate tax planners. Each ruling addressed an increasingly common...more

IRS Rulings Clarify Tax Treatment of Multi-Tier Restructuring Transactions

By declaring a controversial ruling obsolete, the IRS removes uncertainty surrounding the tax effects of certain corporate restructuring techniques. A pair of revenue rulings the US Internal Revenue Service (IRS)...more

DTEK Scheme sanctioned on the basis of a change of governing law of New York law bonds

On 27 April 2015, the English High Court sanctioned a scheme of arrangement (the “Scheme”) for the US$200 million 9.5% senior notes due 2015 (the “2015 Notes”) issued by DTEK Finance B.V. (the “Issuer”), a Dutch finance...more

The DTEK Scheme: A New Way to Restructure US Law Bonds?

Double First: A Ukrainian group of companies breaks ground — first by changing the governing law of its high yield bonds from US to English law and then by being the first Ukrainian-based group to restructure via an English...more

The American Bankruptcy Institute's Recommendations for Chapter 11 Reform

Last December, the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11 released a 400-page report on recommended changes to Chapter 11 of the Bankruptcy Code. Originally published in the April...more

High yield bond restructurings across Europe

As the flood of capital into riskier deals continues to pour in at unprecedented rates, and economic and geopolitical risks evolve, the prospect of a surge of bond defaults in the years ahead is looming over high yield...more

Are You an E&P Company Facing a Liquidity Crunch and Considering Restructuring?

In this lw.com interview, Latham & Watkins partner Michael Chambers looks at the impact of borrowing base redeterminations on exploration and production (E&P) companies. He also discusses additional debt capacity under high...more

Blog: Mandatory Subordination: How Even A Money Judgment Can Be Treated Like Equity In Bankruptcy

When an insolvent entity files for bankruptcy, it can be tough to be a creditor. But holding equity — stock in a corporation or a membership interest in an LLC, a limited liability company — can be even worse. ...more

A Cautionary Tale (or Two) – The Need for Robust Internal Oversight in Financings

In this era of rushed financings and hectic corporate restructurings, internal controls and procedures are more important than ever. Adding litigious shareholders and debtholders to the mix means it’s never been more...more

4 Key Restructuring Considerations for Distressed E&P Companies

“For distressed exploration and production (E&P) companies and their lenders, there can be many significant legal issues associated with restructuring,” according to Latham & Watkins partner Mitchell Seider. Seider is...more

Holder of Equity Interest in Bankrupt Company not Entitled to Become Shareholder in Reorganized Entity

A recent Eleventh Circuit case examines equity shareholders’ role (or lack thereof) in a reorganized entity. Vision-Park Properties owned an equity share of Seaside Engineering & Surveying, Inc. Seaside filed for Chapter 11...more

[Event] Protecting Your Company When Key Suppliers and Customers Enter Bankruptcy - Mar. 25, Palo Alto, CA

At this intimate roundtable discussion, our finance and bankruptcy experts will update you on recent supply chain developments and be available for your related questions....more

How to Ensure Creditor Protection in Cyprus

This article outlines the many ways in which under Cypriot law businesses can protect their interests in their commercial dealings. Any creditor needs to ensure that he will receive payment for the sale of his goods or...more

Restricting Share Capital Reductions in Takeovers

The Companies Act 2006 (Amendment of Part 17) Regulations 2015 (the “Regulations”) came into force on 4 March 2015. The Regulations amend section 641 of the Companies Act 2006 to prevent a company from reducing its share...more

Amendments to Insolvency Law

In December 2014, amendments were introduced to the Federal Law “On Insolvency (Bankruptcy)” No. 127-FZ, dated 26 October 2002 (“Insolvency Law”). This alert analyses some of the amendments that are of crucial importance to...more

Restructurings and Distressed Investing — Planning the Perfect Exit

Investors must address several key issues at the outset of a restructuring to smooth the path to a successful realisation of their investment. The classic image of a restructuring situation is of the critically ill...more

River Road: A Cautionary Tale for Chapter 11 Financial Advisors

The United States Bankruptcy Court for the Northern District of Illinois recently handed down an opinion, In re River Road Hotel Partners LLC, 2014 WL 5488259 (Bankr. N.D. Ill. 2014), dealing with the issue of a financial...more

Proof of Claim: Foreign Qualification Requirements May Be More Important Than You Thought

In re Flex Fin. Holding Co., 518 B.R. 891 (Bankr. D. Kan. 2014) – A landlord filed a proof of claim for ~$1.34 million for a debtor’s prepetition breach of its lease. The debtor objected based on the landlord’s...more

Voluntary Corporate Dissolution in Virginia: An Alternative to Bankruptcy

When financially-distressed small businesses decide to close their doors, less than one-fifth file a voluntary petition in bankruptcy to wind up operations and liquidate. Although legal commentary focuses on bankruptcy as the...more

Trademark Licensees May Be Protected in a Licensor’s Bankruptcy Even After a “Free and Clear” Sale

The Bankruptcy Code generally permits intellectual property licensees to continue using licensed property despite a licensor’s bankruptcy filing. However, because the “intellectual property” definition in the Bankruptcy Code...more

Another Bankruptcy Proofing Strategy Bites the Dust, or Does It?

In an effort to minimize the risk of loss in connection with a loan default, lenders often employ creative means to make it difficult, if not impossible, for a borrower to file bankruptcy....more

Escaping Taxes in Bankruptcy Through S Corporations

Shareholders of financially troubled S corporations may now be able to avoid the flow-through of taxes when the S corporation or its subsidiary files bankruptcy. ...more

LLC Operating Agreement: Is A Purchase Option Enforceable Against A Bankrupt Member?

In re Denman, 513 B.R. 720 (Bankr. W.D. Tenn. 2014) – A chapter 13 debtor was a member of a limited liability company. Another member sought relief from the automatic stay in order to exercise a right to acquire the...more

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