Posts by: Orrick Restructuring Group

Overview and Analysis of Select Provisions of the ABI Chapter 11 Reform Commission Final Report and Recommendations

Posted on

Part Three of Three

Earlier this year, Orrick’s Restructuring team began a three-part look at the American Bankruptcy Institute’s Chapter 11 Reform Report. In part one we looked at issues related to confirmation, valuation, financing and asset sales. Last month, in part two, we focused on modifications to the Bankruptcy Code’s “safe harbors” for derivatives and other complex financial transactions. This final part focuses on a variety of critical issues:  third party releases, rejection of collective bargaining agreements, professional compensation issues and treatment of executory contracts in bankruptcy.

To view part three, please click here.

Myers v Kestrel – The Limits of the Doctrine of Minority Oppression

Posted on

Financially stressed companies often seek to agree significant changes of the terms of their debts with their lenders outside of a formal insolvency process. It is not unusual for borrowers to be able to persuade a majority of creditors to agree to radical amendments, often in the teeth of objection from minority creditors. This Client Alert highlights some recent key case law relating to the protection of dissenting creditors using the doctrine of minority oppression. It also discusses a more recent case, where a judge declined to use this doctrine.

This Client Alert highlights some recent key case law relating to the protection of dissenting creditors using the doctrine of minority oppression. It also discusses a more recent case, where a judge declined to use this doctrine.

READ MORE →

Overview and Analysis of Select Provisions of the ABI Chapter 11 Reform Commission Final Report and Recommendations

and Posted on

Part Two of Three

Last month, Orrick’s Restructuring team began a three-part look at the American Bankruptcy Institute’s Chapter 11 Reform Report. In part one we looked at issues related to confirmation, valuation, financing and asset sales. This second part focuses on modifications to the Bankruptcy Code’s “safe harbors” for derivatives and other complex financial transactions. The final part will focus on professional compensation, treatment of executory contracts and other interesting topics.

To view the full article, please click here.

Debtwire European Distressed Debt Market Outlook 2015

Posted on

Distressed investments will be on the rise in 2015, particularly in Europe, according to Debtwire Europe’s 11th European Distressed Debt Outlook, produced in association with Orrick and Rothschild. High yield bonds, in-court workouts and direct lending are also expected to gain traction in 2015, with economic growth in the EU anticipated to be low or stagnant.

Orrick Partner and Co-head of Europe Restructuring, Stephen Phillips, recently spoke on the Debtwire panel addressing these issues. For additional information, please contact Stephen.

The full report is attached here.

Overview and Analysis of Select Provisions of the ABI Chapter 11 Reform Commission Final Report and Recommendations

Posted on

In December 2014, the American Bankruptcy Institute (ABI) issued its Final Report and Recommendations of the Commission to Study the Reform of Chapter 11. The Report is almost 400 pages long and contains more than 200 recommendations. Twenty-two Commissioners, including attorneys, academics, financial advisors and a former bankruptcy judge spent more than two years taking testimony from over 90 additional restructuring experts and considering the reports provided by 13 advisory committees, each comprised of 10-12 members from the bankruptcy bench, the bankruptcy bar, the financial community and academia. The Commission developed the report with goals including: reducing barriers to entry for debtors, facilitating more efficient resolution of disputed matters, enhancing debtors’ restructuring options and creating an alternative restructuring scheme for smaller businesses.

The recommendations do not constitute proposed legislation. Rather, the Report represents the opinion of the Commissioners and will spur debate. It ultimately could help lead to comprehensive overhaul of the almost 40-year old Bankruptcy Code. Recognizing that major bankruptcy reform generally takes years to wind its way through Congress, the Report implicitly acknowledges that 2018 is an appropriate target date for reform.

That does not mean the Report should be taken lightly, as it represents the consensus view of many well-regarded bankruptcy practitioners, academics and judges. At minimum, the Report will mark the commencement of a conversation about what the Commissioners view as much-needed reforms to the Bankruptcy Code. We also expect the report to receive the attention of judges and litigants in upcoming matters. Parties may look to the Commission’s interpretations of open legal questions as support for their assertions that certain interpretations represent the “better” argument or the “intended” result.

The Report covers nearly every aspect of the chapter 11 process with a multitude of suggested modifications to the Bankruptcy Code and bankruptcy jurisprudence. Below is our analysis of a number of the Commission’s most critical recommendations and of the potential impact of the proposed recommendations on the bankruptcy process.

To view the full article, please click here.

Distressed Debt – UK Tax Changes

Posted on

Currently, if a UK company is released from a debt owed to an unconnected creditor, the default position is that this will be a taxable event for the debtor company and its accounts will recognise a (taxable) credit in respect of this release. Further, where a debt that was previously held by an unconnected party to the debtor company becomes “connected” a “deemed” release of debt may arise, which may give rise to the same issues (although there is a limited exception where debt becomes connected as part of a corporate rescue). In addition, if an “amend and extend” restructuring of debt is undertaken and this gives rise to a “substantial modification” or a reduction in the net present value of the cashflows arising under the relevant loan by at least 10 per cent, the debts may need to be re-recognised in the parties’ accounts and this may result in the UK debtor recognising unfunded taxable credits.

It is important to note, however, that there are exemptions to the tax charge for debtor companies described above, most notably for debt/equity swaps and certain formal insolvency and restructuring procedures. However, these rules generally need to be considered carefully in a restructuring scenario.

The UK tax laws also need to be considered carefully on behalf of any UK creditors; for example, whether the creditor will get bad debt relief (generally not the case where the creditor controls the debtor).  Read More.

A Special Report on the Nigerian Banking System: The Ripple Effects of Lehman – A Tale of Sin and Redemption?

Posted on

​This article focuses on the banking sector crisis which engulfed the Nigerian financial sector from 2008 to 2011, and the steps taken by the Central Bank of Nigeria (CBN) in restoring financial stability. We discuss the impact and the opportunities for international and domestic investors resulting from the crisis.  Read More.