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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.
By Louis F. Solimine, James J. Henderson and Andrew L. Turscak, Jr.
In a recent, unanimous opinion authored by Justice Ginsburg, the U.S. Supreme Court affirmed lower court decisions holding that a bankruptcy court order denying a motion for relief from the automatic stay constitutes a final order that must be appealed within the time provided under Federal Rule of Bankruptcy Procedure 8002.
By Rudolph J. Di Massa, Jr. and Geoffrey A. Heaton
The U.S. Bankruptcy Court for the Western District of Virginia recently denied creditors’ counsel’s motion for a fee enhancement under the “common fund doctrine,” finding it could not award the requested fees absent statutory authority.
By Lawrence J. Kotler
In the case of In re Solutions Liquidation, the U.S. Bankruptcy Court for the District of Delaware adjudicated a motion to dismiss filed by the debtors’ former managers and officers in connection with the breach of fiduciary duty complaint filed against them by the trustee of the debtors’ liquidating trust.
By Andrew C. Kassner and Joseph N. Argentina Jr.
The provisions of the Bankruptcy Code sometimes conflict with other federal laws and regulations. The Sixth Circuit Court recently considered whether an energy company debtor could reject a power purchase agreement as an executory contract that had been filed with the Federal Energy Regulatory Commission (FERC)