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- Considering the Allowability of “Make-Whole Payments” in Bankruptcy Ultra Petroleum Corporation et al. v. Ad Hoc Committee of OpCo Unsecured Creditors, No. 21-20008 (5th Cir. 2022) Make-whole provisions—common provisions in credit agreements providing for lump sum payments to compensate a lender for unpaid interest if a borrower prepays—have been the subject of litigation concerning whether a claim for a make-whole payment is disallowed under the Bankruptcy Code. In the recent Fifth Circuit decision, Ultra Petroleum Corp. v. Ad Hoc Committee of OpCo Unsecured Creditors,[1] the Court addressed the consequential question... More
- Paragon Offshore, plc: US Trustee Denied Quarterly Fees Based on Litigation Trust’s Payments to Its Beneficiaries The U.S. Bankruptcy Court for the District of Delaware recently denied the US Trustee’s motion to compel post-confirmation quarterly fees from Paragon Offshore, plc under 28 U.S.C. § 1930.[1] The court described the case’s facts as simple: Paragon (and some related entities) filed for Chapter 11 in early 2016. In June of 2017, its reorganization plan was approved. The plan established a litigation trust (the Paragon Litigation Trust) to pursue certain claims against third parties. The plan (and the litigation trust... More
- The Hertz Restructuring: A Rare Win for Public Stockholders On May 22, 2020, amidst the deepest possible gloom about COVID-19’s impact on travel, the car rental giant, Hertz Global, filed for Chapter 11. According to reporting by Barrons,[1] during the reorganization, Hertz drastically cut the size of its fleet and closed locations. Like most shareholders of bankrupt companies, Hertz owners were likely to be wiped out. But the economy is improving: travel has returned, Hertz’s creditors are being paid in full, and according to reporting by Barrons, its shareholders... More
- Navient’s Expedited Motion to Dismiss Student Loan Borrowers’ Involuntary Chapter 11 Petition Earlier this month, three student loan borrowers filed an involuntary Chapter 11 petition under 11 U.S.C. § 303(b)(1) for Navient Solutions LLC, a student loan servicer. Three or more entities who each hold a claim against an involuntary debtor can file an involuntary bankruptcy petition on that debtor’s behalf if each claim is neither a contingent liability nor the subject of a bona fide dispute as to liability or amount. The borrowers alleged that Navient is insolvent and wrongfully collected... More
- S.D.N.Y. Bankruptcy Court Holds that Allegedly Fraudulent Conveyances are Safe Harbored Under Section 546(e) and Provides a New Avenue of Defense Introduction Creditors of an insolvent debtor may avoid certain transfers as fraudulent conveyances under state or federal law. A fraudulent conveyance is a transfer made without the transferor receiving adequate consideration and which satisfies one of three insolvency conditions: 1) the transferor was insolvent when the transfer was made; 2) the transferor was rendered insolvent by the transfer; or 3) the transferor was left with unreasonably small capital to carry on his/her or its business.[1] In bankruptcy cases, however, creditors cannot avoid... More