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Vol 13, Num 3 l October 2015

Technology and Intellectual Property

► In This Issue:

ASARCO and Unsecured Trade Creditors: Boon or Bain?

ABI

Blake D. Roth
Waller Lansden Dortch
& Davis, LLP
Nashville, Tenn.

On June 15, 2015, in Baker Botts L.L.P. v. ASARCO LLC, the Supreme Court held that the Bankruptcy Code does not permit bankruptcy courts to award attorney fees under § 330(a) of the Bankruptcy Code to counsel or other professionals employed by the bankruptcy estate for work performed in defending a fee application, potentially giving unsecured trade creditors, and the official committees representing their interests, another avenue for extracting value and providing new retention issues for which to watch in the early stages of bankruptcy cases. At the same time, however, the decision will require official committees and their professionals to be mindful of new risks posed with respect to their fees and applications for payment under § 330(a).
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Poor Drafting of Loan Documents Leads to the Disallowance of Hundreds of Millions of Dollars in Make-Whole Claims

ABI

Jon T. Pearson
Ballard Spahr LLP
Philadelphia

Make-whole premiums are a fixture of commercial loan agreements. Their purpose is to determine the parties’ respective rights in the event that prepayment becomes economically efficient for a borrower. Absent any limitation on prepayment, a borrower will repay its debt as soon as the benefits of refinancing exceed the transaction cost of procuring a new loan. In so doing, a lender will be deprived of all future interest payments bargained for under the agreement.

As debtors have looked to take advantage of current low interest rates to reduce or eliminate more expensive debt, disputes over the payment of make-whole premiums have become more prominent in chapter 11 cases over the last few years.
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Structuring “Structured” Dismissals after In re Jevic Holdings

ABI

Eric J. Monzo
Morris James LLP
Wilmington, Del.

On May 21, 2015, as amended on Aug. 18, 2015, the U.S. Court of Appeals for the Third Circuit issued a decision approving the settlement and dismissal of a chapter 11 bankruptcy case through a structured dismissal. The court approved the use of a structured dismissal of a chapter 11 bankruptcy where the dismissal calls for a distribution that does not specifically adhere to the priority scheme in Bankruptcy Code § 507. The Third Circuit’s decision may be narrowed to rare instances, but it is acceptable when there are “specific and credible grounds to justify [the] deviation” from the priority scheme. The Jevicdecision, therefore, may provide a template for practitioners to structure dismissals in future chapter 11 cases, and may require courts to determine what constitutes specific and credible grounds to warrant deviating from the Bankruptcy Code’s priority structure.
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Committee Session at the 27th Annual Winter Leadership Conference

NEW

This year the Unsecured Trade Creditors & Young and New Members committees will host a joint session titled A Road to Recovery – How to Navigate the Twists and Turns of Insider Litigation. Scheduled for Saturday, from 9:30 - 10:45 am, speakers for this session include Eric D. Madden (Reid Collins & Tsai LLP; Dallas), Nancy A. Peterman (Greenberg Traurig, LLP; Chicago), David M. Posner (Kilpatrick Townsend & Stockton LLP; New York), and Russell C. Silberglied (Richards, Layton & Finger, PA; Wilmington).

Click here for more information. Use code WLCSAVE50 when you register to save $50!

7th Annual Mid-Level Professional Development Program - Chicago - 10.28.15

 

Delaware Views from the Bench Nov. 23, 2015

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