Business Restructuring Review | March–April 2021
In This Issue:
Tenant's Election to Retain Possession of Rejected Lease Premises Preserves Obligations Under Related Agreements
In EPLET, LLC v. DTE Pontiac N., LLC, 984 F.3d 493 (6th Cir. 2021), the U.S. Court of Appeals for the Sixth Circuit reversed a district court's dismissal of environmental remediation claims asserted by a chapter 11 litigation trust against the guarantor of a tenant's obligations under a services agreement that, together with a rejected lease, was part of an integrated transaction. According to the Sixth Circuit, by electing to retain possession of the leased premises under section 365(h) of the Bankruptcy Code, the guaranty was "likewise joined to [the tenant's] § 365(h) election." [read more …]
Legislative Update: New Australian Insolvency Law Reforms Enacted for Small Businesses
In response to the emergence of the COVID-19 pandemic in Australia in 2020, the federal government injected an unprecedented level of stimulus into the Australian economy and introduced temporary law reforms aimed at protecting against an anticipated "tidal wave" of insolvencies. [read more …]
Third Circuit Invokes Equitable Mootness to Bar Appeal of Gifting Chapter 11 Plan
In In re Nuverra Environmental Solutions, Inc., 834 Fed. App'x 729 (3d Cir. 2021), the U.S. Court of Appeals for the Third Circuit handed down a long-awaited ruling that could have, but ultimately did not, address the validity of "gifting" chapter 11 plans under which a senior creditor class gives a portion of its statutorily-entitled recovery to one or more junior classes as a means of achieving consensual confirmation. By avoiding the merits and holding that an appeal of an order confirming a "horizontal gifting" plan was equitably moot, the Third Circuit skirted a question that continues to linger in the aftermath of the U.S. Supreme Court decision in Czyzewski v. Jevic Holding Corp., __ U.S. __, 137 S. Ct. 973 (2017), which invalidated final distributions to creditors departing from the Bankruptcy Code's priority scheme as part of a nonconsensual "structured dismissal" of a chapter 11 case. [read more …]
U.S. Supreme Court: Mere Retention of Property Does Not Violate the Automatic Stay
On January 14, 2021, the U.S. Supreme Court held in City of Chicago v. Fulton, 592 U.S. __ (2021), that a creditor in possession of a debtor's property does not violate the automatic stay, specifically section 362(a)(3) of the Bankruptcy Code, by retaining the property after the filing of a bankruptcy petition. The Court's decision provides important guidance to bankruptcy courts, practitioners, and parties on the scope of the automatic stay's requirements. [read more …]
Legislative Update: The Dutch Scheme Has Arrived
After more than six years of development, the legislative process concerning new Dutch restructuring legislation (Wet Homologatie Onderhands Akkoord, or "WHOA") that introduces a Dutch debtor-in-possession proceeding combining features of chapter 11 of the U.S. Bankruptcy Code and the English Scheme of Arrangement was finalized at the end of 2020. The WHOA entered into force January 1, 2021. [read more … ]
Uphill Struggles in the Sunlit Uplands? The Brexit Deal and UK–EU Insolvencies
The deal reached between HM Government and the European Union on December 24, 2020, does not include any framework for the coordination and mutual recognition of cross-border insolvencies and restructurings. For the purposes of insolvency law, the deal represents a "Hard Brexit." Therefore, following Brexit, UK insolvency proceedings no longer benefit from automatic recognition across the EU pursuant to Regulation (EU) 2015/848 of the European Parliament, and vice versa (save for those proceedings commenced prior to December 31, 2020). UK insolvency proceedings commenced after December 31, 2020, will, where necessary, need to be recognized in each relevant EU Member State. [read more …]
Newsworthy:
Jones Day received Virtual 2020 Turnaround Atlas Awards for deals in the following categories: (i) Turnaround of the Year—i-Heart Media restructuring and separation of Clear Channel Outdoor; (ii) Cross Border Turnaround of the Year—syncreon Group restructuring under an English scheme of arrangement, Chapter 15 and CCAA recognition in Canada; and (iii) Private Equity Acquisition of the Year—Nexus Capital acquisition from FTD Companies of FTD North America and Latin America Consumer and Florist businesses, including ProFlowers.
Washingtonian magazine named Kevyn D. Orr (Washington) to its 2020 Top Lawyers list, which features Washington's top legal talent, as voted by area lawyers, in the Bankruptcy practice area.
An article written by Corinne Ball (New York), George J. Cahill (New York), Kay Morley (London), Jayant W. Tambe (New York; Financial Markets), Bruce Bennett (Los Angeles and New York), and Heather Lennox (Cleveland and New York) titled "Chapter 15 and Bankruptcy Credit Events under Credit Default Swaps" was posted on February 16, 2021, on the Harvard Law School Bankruptcy Roundtable.
An article written by Mark A. Cody (Chicago) and Mark G. Douglas (New York) titled "Potential Barriers to Health Care Provider Bankruptcies" was published in the February 17, 2021, edition of Law360.
An article written by Brad B. Erens (Chicago) and Mark G. Douglas (New York) titled "New Appellate Court Ruling on Priority of Straddle-Year Taxes in Bankruptcy" was published on February 12, 2021, in the International Law Office Newsletter.
An article written by Daniel J. Merrett (Atlanta) and Mark G. Douglas (New York) titled "Chapter 11 Exit Financing Ruling: Section 364 Does Not Apply" was published on February 3, 2021, in Lexis Practical Guidance.
Heather Lennox (Cleveland and New York), Katie Higgins (Sydney), Oliver S. Zeltner (Cleveland), and Isel M. Perez (Miami), were part of a team of Jones Day professionals that represented Peabody Energy Corporation in connection with a comprehensive series of recapitalization transactions to, among other things, provide the company with maturity extensions and covenant relief, while allowing it to maintain sufficient operating liquidity and financial flexibility.
An article written by Paul M. Green (Houston) and Mark G. Douglas (New York) titled "More Bankruptcy Courts Join the Fray in Dispute over Rejection of Gas Gathering Agreements" was published on February 2, 2021, in Lexis Practical Guidance.
An article written by Mark A. Cody (Chicago) and Mark G. Douglas (New York) titled "Focus on Healthcare Provider Bankruptcies" was published on February 2, 2021, in Lexis Practical Guidance.
Roger Dobson (Sydney) received a Band 1 ranking in the field of Restructuring/Insolvency in the 2021 edition of Chambers Asia-Pacific: Asia-Pacific's Leading Lawyers for Business.
