Herrick Restructuring Review

Recent Blog Posts

  • Bronx Miracle Gospel Tabernacle: Lender’s Nightmare Continues In a recent appeal to the Second Circuit, Bronx Miracle Gospel Tabernacle Word of Faith (the “Church”), asks the Second Circuit for relief from the sale of its property by a bankruptcy trustee. The Church’s action seeks damages against the trustee and her counsel and the bankruptcy judge who approved the sale. The action claims that the Church’s religious rights under the Religious Freedom Restoration Act (“RFRA”) and the Constitution have been violated in the bankruptcy court. The Church’s appeal... More
  • Car Club Seeks Chapter 11 Protection Despite Growing Membership in “Defensive Move” Despite a relatively strong 2020, New York Classic Motors, LLC, a unit of Classic Car Club Manhattan, filed for chapter 11 protection on April 9, 2021. Classic Car Club Manhattan is a private club where members can drive an impressive fleet of luxury vehicles both new and restored classics. Members are also entitled to attend a calendar of events and access the private clubhouse on the Hudson River. The clubhouse is located at Pier 76, 408 12th Avenue, near the... More
  • Prospective Loss of Equity Is No Basis to Enjoin a UCC Foreclosure, Appellate Division Holds A First Department decision from last month makes it harder for mezzanine borrowers to enjoin UCC foreclosure sales. When there is a default under mezzanine loan documents, the lenders can retake their collateral by noticing and conducting foreclosure sales under the UCC. But mezzanine borrowers can seek relief from a court to enjoin UCC foreclosure sales. During the COVID-19 pandemic, some borrowers succeeded in preventing mezzanine lenders from exercising their rights to a prompt UCC sale by obtaining injunctive relief in New... More
  • A&P Liquidation Will Pay Administrative Creditors Just $.20 on the Dollar: Is There a Better Way? The Great Atlantic and Pacific Tea Company, better known as A&P, recently moved for approval of a structured dismissal of its most recent chapter 11 case. Debtors seek structured dismissal of their chapter 11 cases when they cannot confirm a chapter 11 plan. In this case, the A&P estate is massively administratively insolvent, meaning that it can’t pay expenses that became due after the bankruptcy filing. In theory, the bankruptcy judge, the United States trustee and the creditors committee monitor the... More
  • Nonconsensual Third-Party Releases Not Limited to Plans of Reorganization A decision in the Delaware District Court allowing nonconsensual third-party releases in plans of liquidation has a surprising origin – the Harvey Weinstein scandal. In October of 2017, the Weinstein scandal exploded across the nation, bringing to light over 80 sexual assault allegations against Hollywood mogul Harvey Weinstein. Weinstein saw swift retribution: his businesses, The Weinstein Company Holdings and affiliates (the “Weinstein Debtors”), faced multiple lawsuits and filed for chapter 11 bankruptcy in March of 2018. Weinstein himself was arrested two... More
  • Cryptocurrency Investment Firm’s Liquidation Plan Approved—Wait, What? On March 11, 2021, the Bankruptcy Court for the District of Delaware approved a plan of liquidation for Cred Inc. and debtor affiliates, a collection of cryptocurrency investment firms that filed for Chapter 11 protection on November 8, 2020. So how exactly did a cryptocurrency investment firm go bankrupt in Fall 2020? In November 2019, Bitcoin was trading between $7,000 and $9,500 per coin. By November 8, 2020, the price of BTC had doubled, hitting a high of $15,637. Just... More
  • Texas Storm Continues to Spark Chapter 11 Filings by Electric Providers The record-breaking winter storm that hit Texas in February led to an unprecedented demand for electricity, which the state’s electric utilities were not able to satisfy at pre-storm price levels. Electric Reliability Council of Texas (“ERCOT”), a non-profit that manages the state’s electric grid and sets the wholesale price of electricity, initiated rolling blackouts and set electric prices to the market cap of $9,000 per megawatt hour. The increase in wholesale electric prices also pushed consumer prices to astronomical levels:... More
  • Proposed Law Would Extend COVID-19 Bankruptcy Relief When Congress passed the CARES Act last year, it included changes to the Bankruptcy Code that helped individuals and businesses. Many of these provisions expire on March 27, 2021 even though the economy has not yet returned to normal. The COVID-19 Bankruptcy Relief Extension Act of 2021, which has not passed yet, would extend the changes for another year. The proposed law also seeks to extend other COVID-19 bankruptcy relief provisions that were enacted through the Consolidated Appropriations Act of... More
  • Texas Deep Freeze Spurs Chapter 11 Filing for Waco Based Energy Company Because of the unprecedented winter storm that clobbered Texas in February 2021, Brazos Electric Power Cooperative, Inc., was forced to file for chapter 11 in response to staggering increases in energy prices around the time of the storm. According to the first day declaration, Brazos was financially stable and bankruptcy “was unfathomable.” But in response to rotating outages across Texas, the Public Utility Commission of Texas instructed the Electric Reliability Council of Texas (“ERCOT”) to raise rates far beyond expectations... More
  • In and Out of Bankruptcy in One Day: Record-Setting Prepackaged Restructuring Plan Confirmed Within Hours of Chapter 11 Filing Belk Inc., a national privately-owned department store chain, just completed a $450 million debt restructuring in less than 24 hours! U.S. Bankruptcy Judge Marvin Isgur confirmed the plan the morning of the First Day Hearing despite the U.S. Trustee’s concerns about adequate notice. The Debtors’ prepackaged plan became effective hours after it was confirmed by the Court. Belk argued that the plan must be confirmed quickly because the company had no cash reserves and no committed DIP financing. The Court agreed... More