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Plan support agreements are often an essential component of a successful complex Chapter 11 reorganization and provide a framework for a debtor’s financial restructuring. These agreements have increasingly been used to induce core groups of major lenders and bondholders to support a debtor’s restructuring in return for enhanced recoveries. In re Peabody Energy, 933 F.3d 918 (8th Cir. 2019). Recently, the U.S. Court of Appeals for the Eighth Circuit in the Peabody Chapter 11 cases affirmed confirmation of a plan of reorganization built around a plan support agreement that afforded certain noteholders party to the agreement the exclusive right to purchase a disproportionate amount of the equity in reorganized Peabody sold pursuant to the plan. A group of non-signatory bondholders (the ad hoc group) had objected and argued that the right to participate in the in the new equity raise was not offered on the same terms to all bondholders, thereby rendering the plan unconfirmable under the U.S. Bankruptcy Code.
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By Robert W. Dremluk
The general purpose of Subchapter V was to streamline the Chapter 11 bankruptcy process for small businesses and individuals engaged in business to administer their bankruptcy estate in an efficient and less costly manner.
By Michael L. Cook
The bankruptcy trustee of a bank holding company was not entitled to a consolidated corporate tax refund when a bank subsidiary had incurred losses generating the refund, Tenth Circuit held.
By Sheryl P. Giugliano
Bankruptcy professionals should be relieved by a recent decision holding that although nunc pro tunc orders approving a professional’s retention are now considered “inappropriate” in light of the Supreme Court’s decision in Roman Catholic Archdiocese of San Juan, there is nothing in the Bankruptcy Code, Bankruptcy Rules, or applicable case law preventing an award of compensation before a retention order is entered.
By Derek F. Meek and Hanna Lahr
Proper planning is key to ensuring a company’s financial health when facing an economic downturn. Although companies will come into such planning with different levels of financial health, the same considerations can be helpful in determining the best path forward.