Herrick Restructuring Review
Recent Blog Posts
- Boxed, Inc. in Bankruptcy After Failing to Find a Buyer, Now Seeks a Private Sale of its Spresso Business In re Boxed, Inc., No. 23-10397 (Bankr. D. Del.) New York based e-commerce and software company, Boxed, Inc., filed for bankruptcy after failing to generate needed capital in a 2021 SPAC. Boxed, Inc. tried to sell its e-commerce retail business and its software and service business either together or separately in 2022, but despite an extensive process could not find a buyer. Boxed, Inc. now hopes to sell its software company via a private sale in bankruptcy and wind down the e-commerce business.... More
- 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
- Third Circuit Court of Appeals Reverses Bankruptcy Court’s Decision and Dismisses the Chapter 11 Case filed by J&J entity LTL Herrick’s Work on Behalf of Well-Renowned Bankruptcy Professors Supported Dismissal In October 2021, LTL Management LLC (“LTL”), an entity created by Johnson & Johnson (“J&J”) to hold its liabilities to cancer victims exposed to talc in J&J’s products, filed for Chapter 11 bankruptcy protection. The Herrick team filed amicus briefs on behalf of a group of well-renowned bankruptcy professors in support of the Official Committee of Talc Claimants’ motion to dismiss LTL’s chapter 11 case. The matter was originally heard before the Bankruptcy... More
- Sale Procedures for 363 Sale of Compute North Partially Approved With Timing of Sale to Be Addressed at Supplemental Hearing In re Compute North Holdings, Inc., No. 22-90273 (Bankr. S.D. Tex.) The bankruptcy court approved a portion of proposed bid procedures for the sale of Compute North. Debtors sought an expedited sale timeline, with bids due by October 27, 2022, but the Compute North UCC objected. The parties agreed the sale timeline would be addressed at an October 21 hearing. Compute North contractual counterparties objected, seeking favorable carveouts and clarifications in the approved sale procedure, which were also pushed to the October 21... More
- Cryptocurrency Mining Data Center Files for Chapter 11 Amid Crypto-Recession In re Compute North Holdings, Inc., No. 22-90273 (Bankr. S.D. Tex.) Compute North Holdings, Inc., a large data center with a focus on cryptocurrency mining, files for Chapter 11 protection amidst an atrocious business environment for all things crypto. Compute North was pushed into bankruptcy after its relationship with one of its primary lenders broke down. Debtors’ plan to sell all its assets quickly may be a challenge for unsecured creditors. The Filing: Compute North Holdings, Inc. and related entities, a data center company... More
- Bankrupt Cryptocurrency Debtor Seeks Sale of Stablecoins Bankrupt cryptocurrency lender Celsius Network LLC recently sought permission to sell some of its “stablecoin” for U.S. dollars to continue operations through its Chapter 11. Celsius requires court approval for the sale pursuant to an earlier order requiring court authorization to convert its cryptocurrency to cash. According to Celsius, the sale of its stablecoins would pose no risk to creditors due to the relative stability provided by stablecoins versus traditional cryptocurrencies. Stablecoins are fiat-pegged cryptocurrency meant to track government issued... More
- Revlon Lenders Must Return $500 Million Mistaken Wire Transfer to Citibank, N.A. On September 8, 2022, the Second Circuit held that lenders to Revlon, Inc., a global cosmetics company, must return approximately $500 million to Citibank N.A., which Citibank had inadvertently paid on Revlon’s behalf. The decision vacated a lower court’s ruling from 2021 that the lenders could retain the funds. On August 11, 2020, Citibank, as agent under a term loan agreement, intended to process a $7.8 million interest payment by Revlon to its lenders. Instead, Citibank mistakenly wired the entire principal... More
- There’s No Insolvency Exception to a Shareholder Vote Requirement to Transfer a Corporation’s Assets in Delaware In a recent Delaware Supreme Court decision, the Court held that there is no “insolvency exception” to the requirement in Section 271 of the DGCL that a transfer of all or substantially all of a corporation’s assets foreclosure transfer be approved by the corporation’s shareholders. The Delaware Supreme Court overruled a decision by the Delaware Chancery Court that used Section 271—which requires a shareholder vote when a corporation sells all or substantially all of its assets—to interpret a Class Vote Provision... More
- Steven Smith Discusses the Recent Supreme Court Decision, Siegel v. Fitzgerald, with the ABF Journal Restructuring and Finance Litigation partner Steven B. Smith recently met with Phil Neuffer, the Managing Editor of ABF Journal, to discuss the recent United States Supreme Court decision Siegel v. Fitzgerald, No. 21-441, in which the Court unanimously held that a significant quarterly fee increase applicable to debtors in the United States Trustee judicial districts and not to debtors in the Bankruptcy Administrator judicial districts located in North Carolina and Alabama violated the uniformity requirement of the Constitution’s Bankruptcy Clause.... More
- Landmark Delaware Bankruptcy Court Ruling that Debtors Did Not Have to Pay Make-Whole Premium Was in Error, First Lien Lenders’ Argue on Appeal Last November, Judge John Dorsey of the Delaware Bankruptcy Court held in the Mallinckrodt chapter 11 case that the debtors did not have to pay a $94 million “make-whole” premium that was provided for in an indenture governing first lien notes. The indenture provides for automatic acceleration following an Event of Default, which includes a bankruptcy filing. Acceleration makes “the principal of, premium, if any, and interest on all the Notes . . . immediately due and payable . .... More