United States: Business Restructuring Review | September–October 2018

Last Updated: October 12 2018
Article by Mark G. Douglas

In This Issue:

Caveat Emptor—Anti-Assignment Clause Renders Transferred Claim Unenforceable

In In re Woodbridge Group of Companies, LLC, 2018 WL 3131127 (Bankr. D. Del. June 20, 2018), the bankruptcy court ruled that, because an anti-assignment clause in a promissory note was enforceable under state law, a transferred note claim asserted in bankruptcy by the purchaser of the note must be disallowed.  [ read more . . .]

Fifth Circuit Rules That Corporate Charter Provision Requiring Shareholder Consent for Bankruptcy Filing Is Enforceable but Declines to Rule on Validity of "Golden Shares"

In Franchise Services of North America, Inc. v. Macquarie Capital (USA), Inc. (In re Franchise Services of North America, Inc.), 891 F.3d 198 (5th Cir. 2018), the U.S. Court of Appeals for the Fifth Circuit recently affirmed a bankruptcy court order dismissing a chapter 11 case filed by a corporation without obtaining—as required by its corporate charter—the consent of a preferred shareholder that was also controlled by a creditor of the corporation.  [ read more . . .]

Fifth Circuit Adopts Flexible Approach to Collateral Valuation in Cramdown Chapter 11 Cases

In In re Houston Regional Sports Network, L.P., 886 F.3d 523 (5th Cir. 2018), the U.S. Court of Appeals for the Fifth Circuit held that bankruptcy courts have flexibility to select the date on which to value collateral, "so long as the bankruptcy court takes into account the purpose of the valuation and the proposed use or disposition of the collateral at issue."In so holding, the Fifth Circuit rejected the proposition that a bankruptcy court must value collateral as of either the bankruptcy petition date or the effective date of a cramdown chapter 11 plan.  [ read more . . .]

Oil and Gas Industry Update: Second Circuit Upholds Rejection of Sabine Gas Gathering Agreements

In Sabine Oil & Gas Corp. v. Nordheim Eagle Ford Gathering, LLC (In re Sabine Oil & Gas Corp.), 734 Fed. Appx. 64, 2018 WL 2386902 (2d Cir. May 25, 2018), the U.S. Court of Appeals for the Second Circuit in a summary order upheld a 2017 ruling by district judge Jed S. Rakoff that affirmed 2016 bankruptcy court rulings authorizing chapter 11 debtor Sabine Oil & Gas Corp. to reject certain gas gathering and handling agreements under section 365 of the Bankruptcy Code.  [ read more . . .]

Newsworthy:

In 2018, for the 17th year running, Jones Day was included among The BTI Consulting Group's "Most Recommended Law Firms" on the basis of client service excellence.

In 2018, for the third year in a row, the "Best Law Firms" survey published jointly by U.S. News and Best Lawyers named Jones Day "Law Firm of the Year"in the field of Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law.

Thomas A. Wilson (Cleveland), Sidney P. Levinson (New York), Jeffrey B. Ellman (Atlanta), Dan B. Prieto (Dallas), Kevyn D. Orr (Washington), Thomas M. Wearsch (Cleveland), Scott J. Greenberg (New York), Thomas A. Howley (Houston), James O. Johnston (Los Angeles), Aldo L. LaFiandra (Atlanta and New York), Heather Lennox (Cleveland and New York), Gregory M. Gordon (Dallas), Corinne Ball (New York), Carl E. Black (Cleveland), Bruce Bennett (Los Angeles and New York), and Brad B. Erens (Chicago) were recognized in The Best Lawyers in America (2019) in the fields of Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law and/or Litigation—Bankruptcy.

Stacey L. Corr-Irvine (New York) has been selected as one of Law360's Bankruptcy "Rising Stars" for 2018. Law360 profiled her in its July 30, 2018, edition.

Bruce Bennett (Los Angeles and New York) received a 2018 Turnaround of the Year Award from the Turnaround Management Association in the category "Mega Company" for his efforts in connection with the chapter 11 restructuring of Caesars Entertainment Operating Company.

Gregory M. Gordon (Dallas), Thomas A. Howley (Houston), andDan B. Prieto (Dallas) were selected as 2018 Texas Super Lawyers for Bankruptcy: Business. Fewer than 2.5 percent of eligible Texas lawyers receive this honor.

Scott J. Greenberg (New York), Joseph A. Florczak (Chicago), andAmanda A. Parra Criste (Miami) are part of Jones Day's team of professionals representing a group of lenders to Tweddle Group, an automotive supplier, in an out-of-court restructuring pursuant to which the lenders will receive 100 percent equity ownership of Tweddle Group and an amended term loan facility in exchange for their existing claims. Jones Day was able to obtain consent from 100 percent of the lenders in order to facilitate an out-of-court transaction. Absent such unanimous consent, the company would have filed a prepackaged chapter 11 case to implement the restructuring.

Gregory M. Gordon (Dallas), Paul M. Green (Houston), Amanda S. Rush (Dallas), andJonathan M. Fisher (Dallas) are representing retail chain Samuels Jewelers in connection with its chapter 11 filing on August 7, 2018, in the U.S. Bankruptcy Court for the District of Delaware. The Austin, Texas-based company filed for bankruptcy for the fourth time, claiming that allegations of bank fraud against executives of its parent company in India had damaged the business. The retail chain plans to close more than 100 of its 120-plus stores.

Bruce Bennett (Los Angeles and New York), Michael C. Schneidereit (Los Angeles), Dan T. Moss (Washington), Ryan Sims (Washington), andAshtyn M. Hemendinger (New York) are representing the official unsecured creditors' committee of Toys "R" Us Property Company I, LLC, and certain affiliates in connection with chapter 11 cases filed by the companies on March 20, 2018, in the U.S. Bankruptcy Court for the Eastern District of Virginia.

Heather Lennox (Cleveland and New York) was designated a "Notable Practitioner" in the field of "restructuring and insolvency" in the IFLR1000 for 2019. Scott J. Greenberg (New York) and Dan B. Prieto (Dallas) were endorsed as "Leading Lawyers—Rising Stars."

Scott J. Greenberg (New York), Thomas A. Howley (Houston), Michael J. Cohen (New York), Nicholas J. Morin (New York), Anna Kordas (New York), and Rachel Biblo Block (Dallas) are representing Rex Energy in connection with its pre-negotiated chapter 11 filing on May 18, 2018, in the U.S. Bankruptcy Court for the Western District of Pennsylvania. After an auction, Pittsburgh-based PennEnergy Resources agreed to purchase the company for $600.5 million. The sale transaction was expected to close by the end of September.

On July 24, 2018, Dan T. Moss (Washington) and Corinne Ball (New York) took part in the Law Society of Singapore's Insolvency Conference 2018 in Singapore. At the conference, Dan participated in a moot court proceeding, arguing on behalf of unsecured noteholders in a cross-border restructuring involving a U.S. chapter 11 case, a concurrent Singapore scheme of arrangement, and the British Virgin Islands proceeding in which the cases had been recognized. The argument took place in front of U.S. bankruptcy judge Martin Glenn and a packed ballroom of nearly 500 conference attendees.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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