Herrick Restructuring Review

Recent Blog Posts

  • 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
  • Subchapter V: The Paper Anniversary When Congress passed the Small Business Reorganization Act (“SBRA”) in August 2019, we lived in a different world. The SBRA added a “Subchapter V” to the Bankruptcy Code for small business debtors, responding to longstanding criticism of the Bankruptcy Code’s costs and complexities on small businesses trying to reorganize. The SBRA became effective exactly one year ago, on February 19, 2020, and when many businesses in the United States shut their doors in March 2020, many thought that the timing... More
  • Greylock Capital Associates, LLC May Preview A Rash of Filings To Reject New York City Leases Greylock Capital Associates, LLC, a New York-based hedge fund founded in 2004, recently filed for chapter 11 protection under subchapter V for small businesses. Assets under management for Greylock have halved since 2017 and the hedge fund has cut its staff from 21 people to just nine now. Greylock filed to reject its $100,000 per month Madison Avenue lease that the hedge fund no longer needs. Greylock leased the 11,400 square foot premises in 2014, but when the fund’s growth... More
  • Seadrill Bankruptcy Court Sanctions BP For Willful Violation of Automatic Stay in Arbitration Proceeding On January 28, Judge David Jones of the Bankruptcy Court for the Southern District of Texas sanctioned BP after finding that its conduct in an arbitration proceeding involving the Seadrill debtors amounted to a “willful, knowing, and intentional” violation of the Bankruptcy Code’s automatic stay provisions. Judge Jones also sanctioned BP by awarding Seadrill their attorneys’ fees and costs in bringing the motion. Seadrill brought an emergency motion to enforce the automatic stay pursuant to Section 362 of the Bankruptcy Code... More
  • Hotels 2021: Restructurings on the Horizon? The Outlook A recent string of high-visibility hotel chapter 11 filings  has led investors and lenders to wonder what to expect for 2021. Recent filings include: Martinique Hotel, a 165-key property in Brooklyn – September 2020 Tillary Hotel, Brooklyn, a 174-key boutique property in Brooklyn – December 2020 Holiday Inn Resort Orlando Suites, a 777-key property in Orlando, Florida – January 2021 Wardman Park Hotel, a 1,152-key property in Washington, D.C. – January 2021 Eagle Hospitality REIT, filed chapter 11 petitions for 18 properties, including the... More
  • Recent Supreme Court Ruling Provides Important Protection for Secured Creditors On January 15, 2021, the Supreme Court unanimously ruled in City of Chicago v. Fulton that a secured party in possession of a debtor’s collateral does not violate the automatic stay by passively retaining possession after a debtor commences a bankruptcy case. When a debtor files a bankruptcy case, the Bankruptcy Code protects the debtor by imposing an automatic stay on efforts to collect prepetition debts or “any act . . . to exercise control over property” of the bankruptcy... More
  • Herrick’s Restructuring & Finance Litigation: 2019-2020 In Review Herrick congratulates its Restructuring & Finance Litigation Group on the success it has enjoyed over the last two years. The team, which now has 18 members and counting, has grown substantially while taking on a variety of complex litigation matters and Chapter 11 Restructurings. Below is a small sampling of our recent work. We are very grateful to our clients that have entrusted us with such important matters, and we wish everyone a happy and safe holiday season and new year! Representative Matters: In re Sears Holdings... More
  • Bankruptcy Court Affirms Availability of 1111(b) Election in Subchapter V Cases Introduction In In re VP Williams Trans, LLC,[1] Judge Michael Wiles of the United States Bankruptcy Court for the Southern District of New York confirmed that a secured creditor may make an election under section 1111(b) of the United States Bankruptcy Code (the “Bankruptcy Code”) in a proceeding under subchapter V of the Bankruptcy Code for small business debtors. Judge Wiles’s decision appears to be the first decision on this issue in this Circuit since subchapter V of the Bankruptcy Code came into... More
  • Second Circuit Does Not Flip Flop on Enforceability of Flip Clauses On August 11, 2020, the Second Circuit addressed the long-standing question of whether flip clauses are enforceable in bankruptcy. Affirming a Southern District of New York decision, the Court found in Lehman Brothers Special Financing Inc. v. Bank of America N.A. that flip clauses are protected under the safe harbor and therefore enforceable in bankruptcy.[1] Investors should take comfort that this decision puts the final nail in the coffin of the earlier controversial decisions in the Lehman Brothers chapter 11 proceedings that had... More
  • Hedge Fund Founder Faces Criminal and SEC Charges Based on Alleged Misconduct in Neiman Marcus Bankruptcy Dan Kamensky, the founder and principal of the prominent hedge fund, Marble Ridge Capital LP and Marble Ridge Master Fund LP (“Marble Ridge”), was arrested on Thursday, September 3, 2020, by the FBI, the most recent development in a dramatic chain of events in the Chapter 11 proceedings of retailer Neiman Marcus. According to the U.S. Attorney’s Office for the Southern District of New York, Kamensky’s criminal charges stem from his attempt to pressure a rival bidder to abandon its... More