Business Restructuring Review

In this issue:

• Disenfranchising Strategic Investors in Chapter 11: "Loan to Own" Acquisition Strategy May Result in Vote Designation
  A New York district court affirmed a ruling disallowing the votes of a creditor that purchased the debtors' secured debt at par, after the debtors had filed a chapter 11 plan that proposed to satisfy the secured debt in full, to block plan confirmation and take control of the debtors.
• Credit Bidding in a Sale Under a Plan Is Not a Right: The Third Circuit’s Philadelphia Newspapers Decision
  The Third Circuit affirmed a ruling denying a secured creditor the ability to credit-bid its claims under a "cramdown" chapter 11 plan proposing the sale of the creditor’s collateral.
• Close Scrutiny of Breakup Fees in Bankruptcy Asset Sales Continues
  The Third Circuit had an opportunity to revisit section 503(b)’s application to breakup fees, ruling that such fees may be allowed only if they are necessary to induce a stalking-horse bidder either to enter into a transaction or to adhere to its bid after the court orders a public auction.
• Cross-Border Bankruptcy Battleground: The Importance of Comity (Part II)
  The role of comity in cross-border bankruptcy cases both within and outside the framework of chapter 15 was highlighted by rulings in the Metcalfe & Mansfield and Lehman Brothers bankruptcy cases.
• A Claim by Any Other Name: Court Disallows 503(b)(9) Claims Under Section 502(d)
  A Virginia bankruptcy court held that 20-day claims held by avoidable transfer recipients must be disallowed under section 502(d) pending the return of prepetition payments subject to avoidance in preference litigation.
• From the Top, in Brief: 2010 U.S. Supreme Court Bankruptcy Rulings
  The U.S. Supreme Court has handed down two decisions involving issues of bankruptcy law thus far in 2010.
• Chapter 15 Debut in the Circuits
  The Fifth Circuit held that, as chapter 15 was intended to facilitate cooperation between U.S. courts and foreign bankruptcy proceedings, a bankruptcy court has authority to permit relief under foreign avoidance law.
• Contract Law Update: Is an Executed Term Sheet a Binding Contract or an Unenforceable "Agreement to Agree"?
  The Appellate Division of the New York State Supreme Court held that a term sheet expressly providing that binding terms will be established only upon the completion of definitive loan documentation does not create an enforceable agreement to lend.