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§ 363 Sale Issues
Are there limits to “free and clear” (GM)? This panel will discuss sales free and clear of leasehold interests, restrictive covenants and override royalties; conflicts between §§ 365 and 363(f) (lease- or license-stripping); assets free and clear of successorship in CBAs; selling free and clear of environmental liabilities (La Paloma, Exide); loan-to-own strategies; and the treatment of breakup fees (C&K Market, EFH).
Corporate Governance in Distressed Situations
This panel will focus on different strategies sponsors are using to retain control (or at least put a stake through) the bankruptcy process. What are the risks to sponsors/litigation issues? The panelists will also discuss fiduciary duties, managing conflicts and retaining separate counsel, the interplay between corporate governance and aggressive sponsor action (e.g., selling or spinning/stripping-off assets), sponsor affiliates purchasing debt in the portfolio company’s capital structure, and 10b-5 compliance, as well as negotiating/litigating with a difficult board. This session also includes a discussion of issues that arise when dealing with a challenging board of directors, especially those where some or all directors have been appointed by a controlling shareholder.
Trends in DIP Financing
This panel will discuss financing orders, milestones and other case management through the DIP facility. What should be allowed for case management by secured creditors via DIP-financing and/or cash-collateral orders, including the case milestones? What terms are and should be acceptable in first-day cash-collateral and DIP-financing orders (Aegean) — too much control, or simply adequate protection? What does it take for a third party to prime? This session will also focus on structural priming, including by taking liens on unencumbered foreign assets (Hexion), using DIP financing as a tool to protect pre-petition debt, the use of roll-ups, the ratio of new money to roll-up that is necessary/“market”, justifying a zero-new-money roll-up (EP Energy), providing a secured term loan pre-bankruptcy and using the proceeds as cash collateral, and rolling up pre-filing emergency loans (Westmoreland).
Recent Confirmation Developments
Join this session for a discussion on plan vs. statutory impairment (Ultra, PG&E), treatment of third-party releases/plan proponents (Millennium (3d Cir.), SunEdison and other recent S.D.N.Y./Del. Decisions; Emerge and Cloud Peak (Del.)), and classification (Novinda (10th Cir. BAP, litigation claims against a creditor justifies separate classification from other unsecureds)). Should all similarly situated creditors have the right to participate in rights offerings, financings, etc. (PacDrilling, Peabody)? The panelists will also discuss feasibility in light of the return of debtors to bankruptcy (including in the energy and retail space). Are reorganizations being rubber-stamped too easily?
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