Plan Confirmation

This session covers a number of recent confirmation hot topics, including structured dismissals and the absolute priority rule (In re Jevic Holding Corp.), interpretation of the Trust Indenture Act (Marblegate Asset Management v. Education Management Corp.), frontloading notice in prepacks (In re Roust Corp.), permissibility of nonconsensual third-party releases (In re Millennium Lab Holdings II LLC), and cross-border confirmations (Nortel Networks).

This session will highlight particularly interesting case law developments to date in 2017 and their impact on bankruptcy law and practice.

Great Debates Resolved: Passively holding an asset of the estate in the face of a demand for turn-over violates the stay. (I swear, Your Honor, I didn’t do anything!) Resolved: Gift plans violate the Bankruptcy Code and are outlawed by Jevic. (Is it really a birthday without the gifts?) Resolved: A trustee should be permitted to avoid transfers occurring many years prior to the petition date by stepping into the shoes of “special” creditors such as the IRS or the FDIC pursuant to § 544(b). (I’m Baaaack!!!)

The next evolution of insolvency practice is upon us. The morphing of what started as a restructuring practice into a § 363 sale practice is old news, while the more recent introduction of nontraditional, sophisticated financial investors into the process has brought about another evolution: the debt-to-equity conversion. Why settle for prime and three when you can use Bankruptcy Code provisions like the absolute priority rule and the securities law exemption to come out post-effective date with a freely tradable equity instrument that will enable the holder to share in all of the upside of the reorganized enterprise? This panel will explore the mechanics of a debt-to-equity conversion in the context of a chapter 11 plan in the legal context, then will explain the valuation metrics and allocation calculations that underlie the dynamics as to who gets to participate and the amount of equity offered to the various case constituencies. The discussion will also cover the tools used to spur creditor acceptance of the conversion and uses of the paradigm as a means of raising new capital for the restructured debt, such as backstop agreements and rights offerings.

This interactive nuts-and-bolts panel will discuss three phases of settlements in the context of a bankruptcy case: (1) negotiating a settlement, including evaluating the benefits of settlement versus litigation risk and expense, negotiating tactics and strategies, and the role of the mediator; (2) drafting term sheets and settlement agreements, an overview of the law on the enforceability of term sheets and settlement agreements (both pre- and post-court approval), and the components of the settlement agreement; and (3) consummating the settlement, with an emphasis on Federal Rule of Bankruptcy Procedure 9019 standards, the necessary components of a motion to approve compromise, presentation to the bankruptcy court, the bankruptcy court’s role in evaluating the settlement and the court’s order approving the settlement, the nonbankruptcy aspects of a settlement, and post-settlement actions.

How to keep your equity when those about you are losing theirs (and blaming it on you).

This session will focus on the current state of the doctrine and recent criticisms, especially from the Third Circuit (Philadelphia Newspapers, SemCrude, One2One Communications), and its applications (City of Detroit (invoking the doctrine to reject the attempted restoration of pension benefits in the city’s bankruptcy)).

This panel will explore a variety of issues related to plan confirmation, including artificial impairment (Village Green I, GP v. Federal National Mortgage Association), cramdown interest rates/subordination/make-whole provisions (MPM Silicones) and third-party releases (Millennium Lab Holdings).

In the first decision addressing the point, the Ninth Circuit held that there’s a difference between an insider and a claim held by an insider. The ruling blessed an insider’s sale of a claim, relieving the claim of any taint and allowing the new holder to vote on confirmation. The panel looks at the developing issues on whether the buyer is a nonstatutory insider and whether the plan can be pursued in good faith after such a sale.