2019

Join in this discussion on a plethora of current ethical issues, including when it is necessary to obtain a conflict waiver (current vs. recent vs. former clients); directly adverse vs. positionally adverse; relatedness to a prior matter; use of confidential information; review of disinterestedness standards under BC § 101(14) and related disclosure requirements; the ABI Report on Standards of Professional Courtesy and Conduct; Caesars litigation over disinterestedness of debtor’s counsel; professionals retentions and disclosure requirements (disclosing conflicts and the Jay Alix/McKinsey litigation); and litigation financing in the liquidating trust context.

This session will examine three issues: (1) the role of management in § 363 sales (how to make sure that management plays the role of neutral stakeholder throughout the plan and/or § 363 process; what actions management might tend to take when it favors a particular bidder in the process; what happens when management wants to participate in the § 363 process); (2) managing management’s interests, including participation in the bankruptcy process (how to address management’s sometimes parochial concerns and keep them from adversely impacting the bankruptcy; the interplay between management’s desires and the desires of the fulcrum class as new owners post-restructuring; issues around management compensation (e.g., employment contracts, incentive plans, severance policies), including the assumption or rejection of existing contracts, plans or policies and/or the implementation of new ones and U.S. Trustee objections; who represents management and when management should look to cut its own deal); and (3) labor issues (issues around benefit plans; whether § 1113 is the only way to eliminate a successor clause (A&P); whether § 1113 is an option if the collective bargaining agreement expires or is expired (Hostess, Trump, Journal Register); whether the union has a claim for damages if rejection relief under § 1113 is granted).

This panel will discuss what strategies sponsors are using to retain control (or at least a stake) through the bankruptcy process, as well as the risks to sponsors, such as fiduciary duties; use of special committees as sword and shield; related-party transactions; sponsor affiliates purchasing debt in the portfolio company’s capital structure, as well as 10b-5 compliance; and selling or spinning off assets/business units (Caesars, Cengage, Nine West, PetSmart, Sears, Toys).

There are two common scenarios in which the valuation of a company’s debt securities might need to be assessed. If the consideration under a bankruptcy plan includes debt, how do we determine whether that debt will trade at par, and what disclosure is required? If a buyer in a § 363 sale proposes to issue debt as payment, how should this be valued? Are the considerations the same in these two scenarios?

Get up to date on recent confirmation developments, including cram-ups/reinstatements since Momentive, including the Momentive remand trial; excising third-party releases from a confirmed plan (In re Thru Inc.); nonconsensual releases (Seaside Engineering); vote-designation (Fagerdala (in which a secured lender purchased sufficient unsecured claims to block plan confirmation (9th Cir.)), LightSquared); classification (Novinda (in which litigation claims against a creditor justified separate classification from other unsecureds (10th Cir. BAP))); per plan vs. per debtor (Transvest, Charter, Tribune); and whether all similarly situated creditors should have the right to participate in rights offerings, financings, etc. (PacDrilling).

The panelists will tackle the domestic reach of a foreign stay (Sanjel); non-U.S. companies filing for chapter 11 and the consequences thereof (Ocean Fisheries); recognition of foreign judgments more generally; and recent cases filed in Canada (Concordia and the CBCA).

Dive into § 363 sales issues, including whether there are limits to “free and clear”; the GM conflict between §§ 365(h) and 363(f) (“lease-stripping”); sales free and clear of leasehold interests, restrictive covenants and override royalties; being free and clear of successorships in CBAs; selling free and clear of environmental liabilities (La Paloma, Exide); and loan-to-own strategies.

Recent high-profile cases have been impacted by credit derivatives (e.g., Hovnanian, Sears, Caesars, iHeart). The panelists will discuss how these situations have unfolded and their effects. What pre-filing diligence should a debtor perform in order to be prepared?

The panelists will delve into issues that arise during an LLC bankruptcy. What happens when parties contract out of fiduciary duties? What effect does bankruptcy have on key provisions in an LLC operating agreement, including management and ownership rights and remedies, and what happens when a bankruptcy proceeding is initiated against the LLC or one or more of its members? Learn more about two recent decisions in which bankruptcy courts refused to enforce LLC agreement provisions requiring the respective LLCs to obtain the unanimous consent of their members in order to seek bankruptcy relief (Intervention Energy, Lake Michigan). Finally, the panelists will discuss possible hidden fraudulent-conveyance issues relating to tax attributes. Do LLCs insulate management, and should releases be provided?

This panel will discuss post-petition financing issues, such as what it takes for a third party to prime a DIP and what should be allowed for controls by secured creditors via DIP financing cash-collateral orders, including 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? § 1111(b) elections (Baker Hughes); adequate protection (Chardon); lien-stripping (Caulkett); credit bidding and other rights in connection with § 363 sales (Aerogroup); the recent credit bidding decision in Aeropostale; and the use of roll-ups.