Bankruptcy Behind Closed Doors
October 29, 2004
Last month, we discussed the perceptible increase in the number of bankruptcy transactions taking place with the underlying arrangements being placed under seal. We discussed disclosure obligations, Section 107 and Bankruptcy Rule 9018, and commercial information, citing <i>Orion Pictures</i> as a leading case on the issue of what constitutes "confidential commercial information." Defining the limits of confidential commercial information can also be aided by reviewing cases decided both prior to and after <i>Orion Pictures</i>, where courts have refused to seal court records.
U.S. Recognition of International Financial Restructurings
October 29, 2004
There has been a significant increase in litigation in the U.S. under Section 304 of the U.S. Bankruptcy Code. It is through that statutory mechanism that foreign issuers, having sold debt in the U.S., restructure the debt under foreign restructuring regimes and then return to the U.S. for "recognition." Recognition under ' 304 has been read to cut off claims and litigation by U.S. creditors in U.S. courts, avoid U.S. judgments for collection, and hence can pave the way for the foreign company to access the U.S. capital markets in the future.
Litigation
October 01, 2004
Recent rulings of interest to you and your practice.
Bankruptcy Behind Closed Doors
September 28, 2004
There has been a perceptible increase in the number of bankruptcy transactions taking place with the underlying arrangements being placed under seal. In other instances, the debtor indicates in its motion seeking approval of the transaction that it will not be providing the underlying agreement on which the transaction is based except to the major parties in the case (typically the judge, the creditors' committee, the DIP lenders and the United States Trustee). The burden then shifts to parties in interest to seek to obtain the information if they desire to review it. Part One of a Two-Part Article.
Can the Sequel Make More Money Than the Original?
September 28, 2004
Talk about a balance of power. Debtors want to sell assets for maximum value. Bidders want to buy cheaply and with finality. While debtors want flexible auctions, if the rules are open-ended, bidders will stay home. So what happens to bidder confidence when, after the auction concludes, but before the sale is approved, a late bidder offers more money? Bankruptcy courts must weigh the potential benefits to the estate against the reasonable expectations of the auction participants and the impact of accepting a late bid on the integrity of bankruptcy auctions. Recently, the Seventh Circuit examined this tension in <i>Corporate Assets, Inc. v. Paloian</i>, 368 F.3d 761 (7th Cir. 2004) (<i>Paloian</i>) [as analysed in last month's issue].
Total Bankruptcy Filings At Mid-Year
September 28, 2004
The number of total bankruptcy petitions filed for the 12-month period ending June 30, 2004 has decreased for the first time since 2000 over this time period, according to the latest figures prepared by the Administrative Office of the U.S. Courts.
From Cradle to Grave
August 31, 2004
Bankruptcy lawyers may not get involved in their clients' transactions until it is too late. They may be called in only upon the occurrence of a default, litigation, or the commencement of a bankruptcy case. At that point, they are faced with deals that have been "set in stone" -- drafted and structured by lawyers specializing in the front-end, who may have looked at the transaction from an overly optimistic viewpoint, especially in the case of a long-term deal with another party that presently is in good financial health.
Bankruptcy Courts Allowed to Reopen Section 363 Auctions
August 31, 2004
A bankruptcy judge's mandate, and the purpose of a section 363 sale process, is to obtain the "highest and best" offer for the assets. Finality and integrity of the process are also important policy considerations. Bankruptcy sales are designed to facilitate the estate's ready realization of value from its assets, while at the same time giving purchasers some degree of certainty that they will obtain clear title to an asset, without the fear of having the transaction later reversed. At times, however, these principles may be in conflict, as outlined by the Seventh Circuit.
