Commercial debt buyers risks

Asked how buyers can avoid known but latent risks in investments in financial products, law and business students often respond by suggesting contractual hedges of one sort or another. But they often overlook the meta-risk of insolvency.   

 

Assessing bond risks in municipal bankruptcy:

Even though U.S. law theoretically allows some municipalities (that is, cities and other political subdivisions of a state, such as water reclamation and sewer districts) to seek bankruptcy relief, such cases have been rare, and in these cases, municipal bondholders have emerged all but unscathed.

 

Timing is everything:

Would delaying the request until some months after their appointment affect the outcome? Two different answers emerged from two authoritative sources at precisely the same time in mid-April 2013.  

 

BCCI and the Cayman Islands: Success against the odds

At a recent hearing before the Grand Court, the Cayman Islands liquidators of BCCI Overseas applied for and received their discharge and the Court ordered the formal dissolution of all of the BCCI group companies in the Cayman Islands. This judicial procedure brought to an end an assignment that had run for nearly 22 years.

 

Vitro: A roadmap for resisting third-party releases in cross-border insolvency cases

Reorganisation plans frequently include releases of non-debtor third parties, but this is one area where informed hedge fund creditors have significant power to resist the destruction of an important alternate source of recovery.

 

 

Increasing volatility at the intersection of intellectual property and restructuring law

Recent fireworks between tech giants Apple and Samsung illustrate the intensity of modern battles over intellectual property rights. Even for companies whose business does not so obviously hinge on patent and trademark rights, however, an intellectual property license can be a small but vital lynchpin holding together the non-tech aspects of a company’s traditional manufacturing or other operations. 

 

Appearances are often deceiving:

It is an abuse of process for a party to use an application to court based on an unpaid debt to attempt to liquidate or bankrupt a debtor in order to try to compel payment of a debt which is genuinely disputed.  

 

Leveraging confusion over power allocation in the US bankruptcy system

One of the last places a hedge fund manager or client wants to be is on the business end of a lawsuit by a US bankruptcy trustee or DIP. Suits by the trustees of fraudulent or failed investment schemes and collapsed LBO deals to recover pre-bankruptcy payments as “fraudulent conveyances” or “preferences” continue to captivate media attention.  


  

 

Easing pension and healthcare burdens in Chapter 11

Recent headlines have once again drawn attention to pitched battles over companies’ attempts to ease staggering pension and health care burdens through Chapter 11 reorganisation.

Perversion of securities safe harbours

In September 2011, the District Court for the Southern District of New York applied these safe harbours to eviscerate the Madoff trustee’s effort to recover $1 billion from the owners of the New York Mets baseball team. 

Heads I win, tails you lose:

Two recent cases, however, suggest that US Bankruptcy Courts are still battling with parochialism. In an odd coincidence, these two cases from distant courts conclude that the unique US approach to information “discovery” trumps European approaches, both offensively and defensively.

Pitfalls and promises of pre-pack restructuring

In December 2010, the supermarket giant Controladora Comercial Mexicana became the first major Mexican company to achieve a pre-pack arrangement, for $2 billion of debt, under new pre-pack-friendly concurso provisions.

Bankruptcy and Islam: An explicit tradition of compassion and forgiveness

Though bankruptcy laws in the region today are largely dysfunctional, the Middle East has a uniquely solid and venerable foundation on which more effective insolvency laws might be built. Islam devotes particular attention to notions of peace and forgiveness – including a surprisingly specific rule of bankruptcy relief.

The alternative to bankruptcy is not payment, but waste, uncertainty and chaos

The only people who complain about insolvency proceedings more bitterly than creditors . . . are creditors’ lawyers. The recent case of the developer Al-Murjan points to a revival of the bankruptcy law in the United Arab Emirates, and even though that law is not known to be “debtor-friendly”...

Sui generis maximus: Power over UK persons for “special” US bankruptcy claims

Lawyers often seem too clever in arguing legal niceties to help clients avoid responsibility. Sometimes, though, a lawyer is hoisted with his own petard as a court fashions new super-niceties to reflect modern developments and undercut long-established rules.

Cayman hedge fund liquidators welcome

Forum shopping, or to put it more diplomatically, careful forum selection, is absolutely essential to the effective pursuit of remedies in US Bankruptcy Courts. Another recent decision regarding a Cayman hedge fund seeking – and this time receiving – cooperation from a US Bankruptcy Court illustrates ...