Law.com Subscribers SAVE 30%

Call 855-808-4530 or email [email protected] to receive your discount on a new subscription.

LJN NewslettersNewsSectionsThe Bankruptcy Strategist

Chemtura: 'Make-Whole' and 'No-Call' Provisions

By Edward E. Neiger and Marianna Udem
April 25, 2011

The Bankruptcy Court for the Southern District of New York's recent decision in In re Chemtura Corp., 439 B.R. 561 (Bankr. S.D.N.Y. 2010) (“Chemtura“) examines the treatment of “make-whole” and “no-call” provisions in bankruptcy proceedings in the context of a settlement of such claims pursuant to a plan or reorganization. Generally, a “no-call” provision prohibits the prepayment of debt prior to maturity while a “make-whole” provision acts as a liquidated damages clause and provides a mechanism for determining what amount a debtor must pay in order to prepay its debt prior to maturity. Ultimately approving the settlement without deciding on the enforceability of claims for “make-whole” amounts and damages for breach of “no-call” provisions, the Chemtura court conducted a thorough examination of recent case law and provided a detailed roadmap of the analysis it would conduct should the issues be litigated.

Background

The debtors, specialty chemicals company Chemtura Corporation and its affiliates, sought confirmation of their Chapter 11 plan, which included a global settlement among the debtors, the unsecured creditors committee and an ad hoc group of bondholders. The equity committee objected to confirmation of the plan and the proposed settlement. The debtors' liabilities included, among other things, bonds issued pursuant to two separate indentures. The first indenture (the “2016 Notes”) included a “make-whole” provision, while the second indenture (the “2026 Notes”) included a “no-call” provision. If allowed in full, the aggregate claims asserted pursuant to the respective “make-whole” and “no-call” provisions would total approximately $170 million. The debtors proposed to settle these claims by paying approximately 39% of the potential liability for breach of the “no-call” provision under the 2016 Notes and 42% of the potential liability for the “make-whole” provision under the 2026 Notes.

This premium content is locked for Entertainment Law & Finance subscribers only

  • Stay current on the latest information, rulings, regulations, and trends
  • Includes practical, must-have information on copyrights, royalties, AI, and more
  • Tap into expert guidance from top entertainment lawyers and experts

For enterprise-wide or corporate acess, please contact Customer Service at [email protected] or 877-256-2473

Read These Next
Yachts, Jets, Horses & Hooch: Specialized Commercial Leasing Models Image

Defining commercial real estate asset class is essentially a property explaining how it identifies — not necessarily what its original intention was or what others think it ought to be. This article discusses, from a general issue-spot and contextual analysis perspective, how lawyers ought to think about specialized leasing formats and the regulatory backdrops that may inform what the documentation needs to contain for compliance purposes.

Hyperlinked Documents: The Latest e-Discovery Challenge Image

As courts and discovery experts debate whether hyperlinked content should be treated the same as traditional attachments, legal practitioners are grappling with the technical and legal complexities of collecting, analyzing and reviewing these documents in real-world cases.

Identifying Your Practice's Differentiator Image

How to Convey Your Merits In a Way That Earns Trust, Clients and Distinctions Just as no two individuals have the exact same face, no two lawyers practice in their respective fields or serve clients in the exact same way. Think of this as a "Unique Value Proposition." Internal consideration about what you uniquely bring to your clients, colleagues, firm and industry can provide untold benefits for your law practice.

Risks and Ad Fraud Protection In Digital Advertising Image

The ever-evolving digital marketing landscape, coupled with the industry-wide adoption of programmatic advertising, poses a significant threat to the effectiveness and integrity of digital advertising campaigns. This article explores various risks to digital advertising from pixel stuffing and ad stacking to domain spoofing and bots. It will also explore what should be done to ensure ad fraud protection and improve effectiveness.

Turning Business Development Plans Into Reality Image

This article offers practical insights and best practices to navigate the path from roadmap to rainmaking, ensuring your business development efforts are not just sporadic bursts of activity, but an integrated part of your daily success.