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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 Richard J. Mason
This article looks at some of the issues that may arise if a cryptocurrency exchange becomes a debtor in a case under the Bankruptcy Code.
By John J. Rapisardi and Daniel Shamah
PG&E Corporation and its subsidiary, Pacific Gas & Electric Company announced that it expects to file for Chapter 11 bankruptcy protection on or around Jan. 29, 2019, right around the conclusion of a mandatory 15-day notice requirement under California law. Such a filing would represent the second time PG&E resorted to protection under the U.S. Bankruptcy Code.
By Timothy W. Hoffmann and Mark G. Douglas
In Nuverra Environmental Solutions,, the U.S. District Court for the District of Delaware affirmed a bankruptcy court order confirming a non-consensual Chapter 11 plan that included “gifted” consideration from a senior secured creditor to fund unequal distributions to two separate classes of unsecured creditors.
By Michael L. Cook
The Eighth Circuit affirmed the lower courts’ dismissal of a bankruptcy trustee’s $250 million fraudulent transfer suit against two banks (the Banks), rejecting the so called “Ponzi scheme presumption” that “allows a creditor to by-pass the proof requirements of a fraudulent-transfer claim by showing that the debtor operated a Ponzi scheme and transferred assets ‘in furtherance of the scheme.’”