Bloomberg reports that HighPoint Resources Corp. received approval for its chapter 11 reorganization plan, clearing the way for its merger with Bonanza Creek Energy Inc. less than one week after filing for bankruptcy protection. The fully-consensual plan, which carried the support of more than 99% of impaired claimants, deleverages HighPoint's balance sheet by approximately $625 million vis-à-vis an unsecured debt-for-equity swap and an issuance of new unsecured notes totaling $100 million. Existing equityholders are even slated to receive 1.6% of the new equity in the combined company. [Bloomberg; Mar. 18, 2021].
WSJ analyzes the impact that insurance coverage may have on the viability of the Boy Scout's chapter 11 reorganization and potential for emergence from bankruptcy. According to the latest disclosure statement, filed March 16, the Boy Scouts intend to pay out sexual abuse claims from a pool made up of assets from local scouting organizations, known as "councils," and the national organization. Specifically, local councils intend to voluntarily contribute at least $300 million in cash to the victim compensation fund, while the national organization would contribute certain properties in North Carolina and Texas, oil and gas rights held in several states, art collections, unrestricted cash in excess of $75 million remaining in the estate after other claims are settled, and-most importantly-the rights to its insurance policies. If history is any indication, insurance payouts could constitute the largest source of funding for the victim compensation fund-see, e.g., Harvey Weinstein, USA Gymnastics, Penn State, Roman Catholic Dioceses, etc. However, the insurers holding the pertinent policies are demanding further investigations into the more than 95,000 sexual abuse claims (some Boy Scout policies have no aggregate limits or high per-occurrence payouts available, which could force insurers to face potentially-enormous exposure). Compounding the risk, according to insurers' counsel, is the fact that it is impossible to determine how much coverage is on the table until all claims are analyzed due to "different facts, different policyholders, different policies and different circumstances." US Bankruptcy Court Judge Laurie Selber Silverstein has taken the matters under advisement and intends to issue a ruling at a later date. [WSJ; Mar. 16, 2021].
CNBC reports that the US House of Representatives voted to extend the Paycheck Protection Program for two months by passing the PPP Extension Act of 2021 in a landslide March 16 vote. If passed by the US Senate, the bill would extend the Paycheck Protection Program to May 31-instead of the current March 31 expiration date-and give the Small Business Administration an additional 30 days to process loans. The Senate plans to take up the bill this week, where it is expected to be approved with overwhelming support. [CNBC; Mar. 17, 2021].
Originally Published by Mayer Brown, March 2021
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