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Features

A Cautionary Tale for Lender Overreaching into Bankruptcy Remoteness Image

A Cautionary Tale for Lender Overreaching into Bankruptcy Remoteness

Jeffrey S. Greenberg

<b><i>In re Lexington Hospitality Group, LLC</b></i><p>Bankruptcy remote structures are often used to protect against the impact of default under a credit facility. A common mechanism is organizational documents requiring an outside director or member's vote to authorize a bankruptcy filing. However, the United States Bankruptcy Court for the Eastern District of Kentucky found that such a requirement implemented at the behest of a lender, among other bankruptcy restrictions, and where there was not true independence frustrated the important federal public policy of favoring fresh starts in bankruptcy.

Columns & Departments

On the Move Image

On the Move

ssalkin &

Movers and shakers in bankruptcy law.

Features

Offshore Restructuring Outlook Image

Offshore Restructuring Outlook

David Bulley

The first quarter of 2018 has seen the Dow and NASDAQ pushing through record highs, increasing consumer confidence in the U.S. and Europe. However, there are segments in the market that are expected to need continued restructuring work, both onshore and offshore through 2018, particularly: offshore oil and gas drillers; European and U.S. retail; and the highly leveraged Chinese real estate sector.

Features

What Retailers Can Learn from Recent Bankruptcies Image

What Retailers Can Learn from Recent Bankruptcies

Corali Lopez-Castro & Mindy Y. Kubs

Understanding the factors leading up to these bankruptcies, as well as the strategies used by retailers to emerge from bankruptcy, can give retailers significant knowledge about trends in consumer spending and how retailers can improve their overall positions going forward.

Features

Serving Two Masters: When 'Bankruptcy Remote' Meets Public Policy Image

Serving Two Masters: When 'Bankruptcy Remote' Meets Public Policy

Pamela J. Martinson

<i><b>How Lenders to BREs Can Reduce the Risk of Debtor Bankruptcy Without Compromising Public Policies</b></i><p>Structured financing transactions, including those pertaining to commercial real estate, make extensive use of entities formed for the specific purpose of reducing the likelihood that assets will be involved in a potential bankruptcy proceeding. Known as “bankruptcy-remote entities,” or “BREs,” these entities are subject to structures and covenants in financing documents and their own formation documents, which are designed to reduce the likelihood that the BRE will file for bankruptcy protection.

Features

Anti-Forfeiture Statute Saves a Debtor's Exercise of Option to Renew Lease Image

Anti-Forfeiture Statute Saves a Debtor's Exercise of Option to Renew Lease

Barry M. Klayman & Mark E. Felger

In a recent decision, Bankruptcy Judge Christopher S. Sontchi addressed the question of whether a Chapter 11 debtor, the tenant under a commercial lease, could exercise an option to renew the lease during the bankruptcy proceedings, even though the debtor was in default under the lease and the lease specified that it could not be renewed if defaults existed at the time the option was exercised.

Features

Bankruptcy Venue Reform Bill Introduced Image

Bankruptcy Venue Reform Bill Introduced

Adam Schlagman

On Jan 8, 2018, Senators John Cornyn (R-TX) and Elizabeth Warren (D-MA) introduced the Bankruptcy Venue Reform Act of 2018, which is designed to prevent forum shopping in Chapter 11 bankruptcy cases, a practice that has resulted in a concentration of bankruptcy cases in a few districts.

Features

Recovering Administrative Claims in Chapter 9 Bankruptcy and Title III of PROMESA Image

Recovering Administrative Claims in Chapter 9 Bankruptcy and Title III of PROMESA

James B. Bailey

Municipal bankruptcies under Chapter 9 of the Bankruptcy Code are rare. These cases are often filed to adjust bonded indebtedness and pension obligations. Congressional authorization for Puerto Rico and its instrumentalities to file for bankruptcy under the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) was similarly out of concern for excessive bond debt and pensions.

Features

Bankruptcy Venue Reform Bill Image

Bankruptcy Venue Reform Bill

ljnstaff &

On Jan. 8, 2018, Senators John Cornyn (R-TX) and Elizabeth Warren (D-MA) introduced the Bankruptcy Venue Reform Act of 2018, which is designed to prevent forum shopping in Chapter 11 bankruptcy cases, a practice that has resulted in a concentration of bankruptcy cases in a few districts.

Features

Bankruptcy Court Authorizes Rejection of Employment Separation Agreements Image

Bankruptcy Court Authorizes Rejection of Employment Separation Agreements

Francis J. Lawall & Michael J. Custer

The Bankruptcy Code can be an effective tool for reducing liabilities and enhancing asset value for the benefit of creditors. One of the more important…

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