Business Restructuring Review Vo. 23 No. 5 | September–October 2024
In This Issue
First Impressions: Singapore International Commercial Court Approves Cross-Border Prepackaged Scheme of Arrangement for Unregistered Foreign Company
The Singapore International Commercial Court (the "SICC"), a division of the General Division of the High Court and part of the Supreme Court of Singapore, was established in 2015 as a trusted neutral forum to meet increasing demand for effective transnational dispute resolution. It recently considered, as a matter of first impression for the SICC, whether to approve a prepackaged scheme of arrangement for a group of Vietnam-based real estate investment companies under Singapore's recently enacted Insolvency, Restructuring and Dissolution Act 2018 (the "IRDA"). In Re No Va Land Investment Group Corp., [2024] SGHC(I) 17 (June 7, 2024), the SICC sanctioned a prepackaged scheme, emphasizing that its "description of its experience with the Application constitutes useful precedent for the management and prosecution of similar restructurings that may arise in the future," including its analysis of disclosure obligations with respect to prepackaged schemes under the IRDA. [Read more …]
New York District Court: Cap on Landlord Claims in Bankruptcy Applies to Claims Against Lease Guarantors, and Cap Should Be Calculated Using "Time Approach"
To prevent landlords under long-term real property leases from reaping a windfall for future rent claims at the expense of other creditors, the Bankruptcy Code caps the amount of a landlord's claim against a debtor-tenant for damages "resulting from the termination" of a real property lease. Unfortunately, the language of the provision of the Bankruptcy Code—section 502(b)(6)—that specifies the maximum allowed amount of a landlord's claim for lease termination damages is confusing, and it has led to a number of disagreements among bankruptcy courts regarding application of the statutory cap to claims against debtor-lease guarantors and the proper way to calculate the amount of the statutory cap. The U.S. District Court for the Southern District of New York addressed both of those issues in In re Cortlandt Liquidating LLC, 658 B.R. 244 (S.D.N.Y. 2024). The district court affirmed bankruptcy court rulings that the statutory cap applied to a landlord's claim against a lease guarantor and that, based on the plain language of section 502(b)(6), its legislative history, and other recent rulings considering the question, the "Time Approach," rather than the "Rent Approach," represents "the correct view" in calculating the amount of the landlord's lease termination damages. [Read more …]
Ohio Bankruptcy Court Adopts "Actual Test" to Determine Whether Certain Unassignable Contracts Can Be Assumed in Bankruptcy
If it is ultimately upheld on appeal by the U.S. Circuit Court for the Sixth Circuit, a ruling handed down by the U.S. Bankruptcy Court for the Southern District of Ohio has the potential to widen the 4–1 split among the circuits regarding the circumstances under which a bankruptcy trustee or chapter 11 debtor-in-possession may assume, or assume and assign, an agreement that may not be assigned under applicable non-bankruptcy law without the consent of the non-debtor contract party. In In re Welcome Group 2 LLC, 2024 WL 3359379 (Bankr. S.D. Ohio July 10, 2024), the court concluded that the "actual test," rather than the "hypothetical test," should determine whether such a contract may be assumed because it both "comports with the plain language of the statute" and is consistent with "the overall objectives of chapter 11 relief and the purposes of the Bankruptcy Code." [Read more …]
Ownership Dispute Regarding Foreign Debtor's U.S. Assets Must Be Resolved Before a U.S. Bankruptcy Court Can Approve Sale Under Section 363 in Chapter 15 Case
In In re Goli Nutrition Inc., 2024 WL 1748460 (Bankr. D. Del. Apr. 23, 2024), the U.S. Bankruptcy Court for the District of Delaware denied the motion of a foreign representative in a chapter 15 case under section 363(b) of the Bankruptcy Code to approve a "reverse vesting transaction" authorized by a Canadian bankruptcy court involving a transfer of the foreign debtor's stock to a successor entity because the transaction did not involve a use, sale, or lease of the debtor's property. It also held in abeyance the foreign representative's companion motion to approve a non-ordinary course "free and clear" sale of certain equipment located in California pending resolution of a dispute over the ownership of the equipment. In so ruling, the U.S. bankruptcy court concluded that the propriety of a sale of a foreign debtor's U.S. assets in a chapter 15 case must be assessed according to the standard applied to such sales under section 363(b) of the Bankruptcy Code. The court also determined that the ownership dispute had to be resolved before it could approve the sale, but not necessarily by a U.S. bankruptcy court, and it was appropriate in this case to allow the Canadian court determine the owner of the assets. [Read more …]
Delaware Bankruptcy Court Reinforces the High Bar for Revocation of a Chapter 11 Plan Confirmation Order
In In re Virgin Orbit, L.L.C., 659 B.R. 36 (Bankr. D. Del. 2024), the U.S. Bankruptcy Court for the District of Delaware denied a request by certain equity holders to revoke an order confirming a chapter 11 plan that canceled their equity interests while allocating nearly all of the proceeds generated from a bankruptcy auction sale of the debtors' assets to an insider prepetition and postpetition secured lender as part of a global settlement. According to the court, absent any evidence that the debtors made materially false statements or otherwise procured the confirmation order by fraud, the equity holders failed to satisfy the high bar for revocation. [Read more …]
Tenth Circuit: Bankruptcy Court Did Not Relinquish Its Jurisdiction by Granting Relief from Automatic Stay
Ever since Congress amended the Bankruptcy Code in 1984 to remedy the U.S. Supreme Court's 1982 ruling declaring the jurisdictional groundwork of title 11 unconstitutional, there have been lingering questions regarding the scope of a bankruptcy court's jurisdiction to rule on the many matters and proceedings that must typically be resolved in a bankruptcy case. One of those questions—namely, whether the bankruptcy court retains jurisdiction over claims and assets with respect to which the court has granted relief from the Bankruptcy Code's "automatic stay"—was addressed by the U.S. Court of Appeals for the Tenth Circuit in Summit Inv. Mgmt. LLC v. Connolly (In re Fog Cap Retail Invs.), 2024 WL 659559 (10th Cir. Feb. 16, 2024). The Tenth Circuit affirmed lower court rulings concluding that a bankruptcy court does not relinquish its "related to" jurisdiction by granting a motion for relief from the automatic stay to permit the continuation of state court litigation against a debtor over environmental remediation liabilities. [Read more …]
Newsworthy
Heather Lennox (Cleveland and New York) and Bruce Bennett (Los Angeles) were named "Lawyers of the Year" in the 2025 edition of The Best Lawyers in America® in the fields, respectively, of "Bankruptcy and Creditor Debtor Right/Insolvency and Reorganization Law; Litigation" and "Litigation-Bankruptcy." Caitlin K. Cahow (Atlanta and Chicago), Amanda S. Rush (Dallas), Genna Ghaul (New York), Nicholas J. Morin (New York), and Ryan Sims (Washington) were named "Ones to Watch," and Jeffrey B. Ellman (Atlanta), Aldo L. LaFiandra (Atlanta), Daniel J. Merrett (Atlanta), Brad B. Erens (Chicago), Carl E. Black (Cleveland), T. Daniel Reynolds (Cleveland), Thomas W. Wearsch (New York and Cleveland), Gregory M. Gordon (Dallas), Gary L. Kaplan (Miami), Corinne Ball (New York), Dan T. Moss (Washington and New York), and Kevyn D. Orr (Washington) were recognized in one or both practice areas.
Corinne Ball (New York) (Hall of Fame), Bruce Bennett (Los Angeles), Carl E. Black (Cleveland), Jeffrey B. Ellman (Atlanta), Brad B. Erens (Chicago), Gregory M. Gordon (Dallas), Heather Lennox (Cleveland and New York), Joshua M. Mester (Los Angeles), and Kevyn D. Orr (Washington) were included in the 2024 edition of Lawdragon 500 Leading Bankruptcy and Restructuring Lawyers.
A team led by Alexander Ballmann (Munich) and Anna Geissler (Munich) advised German construction and agricultural Group BayWa on a standstill agreement and a new financing package with its core lenders and largest shareholders that will allow it to finalize a final restructuring solution to deal with its €6.5 billion in debt.
Ben Larkin (London) and Sion Richards (London) were recognized in the 2025 edition of The Best Lawyers in the United Kingdom™ in the practice area "Insolvency and Restructuring Law."
Fabienne Beuzit (Paris), Rodolphe Carrière (Paris), and Isabelle Maury (Paris) were recognized in the 2025 edition of The Best Lawyers in France™ in the practice area "Insolvency and Reorganization Law."
Corinne Ball (New York) and Bruce Bennett (Los Angeles) were designated "Hall of Fame" attorneys in the field "Restructuring (Including Bankruptcy): Corporate" in the 2024 edition of Legal 500 United States. Heather Lennox (Cleveland and New York) received a "Leading Lawyer" designation.
An article written by Corinne Ball (New York) titled "Distressed M&A: Surprises All Around Following a Creditor's Enforcement of a Pledge to Effect Change of Control" was published in the August 21, 2024, edition of the New York Law Journal.
An article written by Heather Lennox (Cleveland and New York), Dan T. Moss (Washington and New York), Ben Larkin (London), David Harding (London), Jasper Berkenbosch (Amsterdam), Alexander Ballmann (Munich), and Olaf Benning (Frankfurt) titled "Cross-Border Restructurings and the New Jurisdictional Chessboard" was published by Reorg Research on July 22, 2024.
Lawyer Spotlight: David Harding
David Harding, a partner in the London Office, focuses his practice on financial restructurings, distressed acquisitions, and formal insolvency proceedings, with a particular focus on European special situations and complex cross-border restructurings, the acquisition of loan portfolios, and the implementation of "loan-to-own" strategies. David successfully transitions assets, management, and operations for a range of clients including investment banks and hedge funds holding distressed debt, corporate debtors (or their directors and shareholders), and insolvency office holders.
Among his many recent actions, David has advised AlbaCore Capital on its co-investment in a €500 million platform to acquire NPL portfolios across Europe (alongside Lindorff and Carval); the administrators of The Body Shop International on the rescue of its global retail business; and the liquidators of Value Discovery Partners in the context of a restructuring and wind-down of a US$1 billion fund. He also has advised on numerous restructuring matters and acquisitions for funds such as AlbaCore Capital, Affinity Capital, Aurelius Investments Group, Canyon Capital Advisors, Cross Ocean Partners, ESO Capital, GoldenTree, RoundShield Partners, and the Lone Star Funds.
