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In June 2017, affiliated holders of the most senior class of notes in a CDO known as Taberna Preferred Funding IV, a CDO that held various issues of trust preferred securities known as TruPS, filed an involuntary petition under the Chapter 11 of the Bankruptcy Code. That noteholders did so on the purported ground that the CDO was in default and in need of immediate reorganization in order to preserve value. That justification, however, was a ruse, put forward by the noteholders in an attempt prematurely to force liquidation of all the CDO’s collateral in order to earn an extraordinary return at the expense of every other class of noteholders. The filing of the petition understandably prompted a group of junior noteholders, the collateral manager and an industry group vigorously to oppose the filing and to seek dismissal of the petition.
By Paul A. Rubin and Hanh V. Huynh
Employees of a troubled company who stay on as consultants to assist in liquidating its assets or preparing the company for a bankruptcy filing may later be disappointed to face claims to claw back their prepetition compensation.
By Howard C. Rubin and Deirdre M. Richards
When Entities May Not Have a Filing Choice and How Creditors Are Impacted
This article explores the difficulties some entities have encountered in filing bankruptcies and how one organization used extraordinary civil remedies in an attempt to accomplish what reorganization under Chapter 11 of the United States Bankruptcy Code would have provided.
By Adam L. Rosen
As widely reported, the downfall of Sears was a slow-motion train wreck. Despite its unique size and complexity, however, some of the strategies and techniques used by the stakeholders in Sears can be applied in cases of any size.
By Adam C. Rogoff
In today’s global economy, companies often have multiple business lines operating through separate entities. Outside of bankruptcy, these affiliated operations sometimes transact in a holistic — albeit legally distinct — debtor-creditor relationship with their counterparty. But, as this article discusses, the legal separateness of affiliates can hinder economic protections that a creditor might have otherwise when its counterparty files for bankruptcy.