Sky Blog
While the distressed debt market continues to be extraordinarily active, Chapter 11 activity has remained at a relatively steady level compared to recent years. The high costs of Chapter 11, together with stakeholder incentives to “kick the can” when possible, …
In an article published in 2007, two lawyers from our firm predicted that “the validity and application of prepayment clauses will continue to be the source of bankruptcy litigation, especially in low interest rate environments.”[1] How true that was. …
Most financing agreements define “Events of Default” as being triggered not only by serious defaults, such as a borrower’s failure to repay its debt, but also by relatively minor or technical “secondary” defaults not involving debt repayment. Typical examples of …
On December 31, 2024, two separate appellate courts issued notable decisions addressing so-called “uptier” transactions. In a typical uptier transaction, a majority of lenders under a credit agreement, in connection with amending the credit agreement and providing additional financing, are …
In leveraged buyouts (LBOs), a private equity (PE) sponsor acquires controlling ownership of a target company, typically by using a significant amount of bank loans. In a new study, we focus on a controversial issue: Many PE sponsors have prior …
In recent years, China has undertaken massive infrastructure development at home and abroad. Under its widely heralded, globe-spanning Belt and Road Initiative (BRI), China’s financial institutions have financed infrastructure projects in numerous countries around the world. Separately, through its so-called …
The proliferation of bankruptcy directors represents a controversial shift in the corporate governance landscape. Independent directors appointed when a company experiences financial distress (known colloquially as “bankruptcy directors”) bring restructuring expertise and experience to a high-stakes situation. Their appointment also …
In a new book chapter I evaluate contemporary corporate law, especially Delaware corporate law, from a classical liberal perspective—i.e., the view of politics and economics that derives from the English and Scottish Enlightenment, underlies the American founding, and has been …
In a new article, I observe that an accurate understanding of intersecting bodies of law can sometimes turn on the scale of observation. In particular, I examine how the intersection of commercial and bankruptcy law creates uncertainty whether a transfer …
In a recent article, we propose a new rule for determining the proper forum for insolvency proceedings. Currently, the Model Law on Cross-Border Insolvency, promulgated by the United Nations Commission on International Trade Law (“UNCITRAL”), looks to a debtor’s center …
In recent years, Chapter 11 of the Bankruptcy Code has prompted critics to claim that, at least when it comes to large companies, it has become a lawless forum where bankruptcy judges have jettisoned fealty to the code in order …
A key principle of Chapter 11 corporate reorganizations is the “absolute priority rule.” It requires that the claims of a dissenting class of creditors be paid in full before any stakeholders in a class junior to such dissenting …
In recent years the corporate debt landscape in emerging markets has changed substantially. Debt in emerging economies climbed to a record high of $55 trillion in 2018, illustrating the largest and fastest surge in the last five decades. In …
Corporate creditors, perhaps like Americans generally, like to think of themselves as rugged individuals who also work within a communal system. The fundamental tension is clearest at the point of default: Too much individuality, and a small minority of creditors …
Venezuela is facing not only a grave humanitarian crisis, but an acute financial and economic one as well–including a massive debt burden. Moreover, Venezuela is in the throes of an extended political stalemate between the forces aligned with the regime …
What should a judge do when creditors claim that they were harmed by management and a board’s carelessness or disloyalty? If the creditors were shareholders, the judge would apply fiduciary duty doctrines to determine liability. Yet it’s unclear what legal …
The CARES Act passed in response to the COVID-19 crisis provides billions of dollars in industry-specific loans that will go to large corporations like Boeing and the major airlines. These provisions are part of a larger compromise that also puts …
On December 9, 2002, UAL Corporation, which operated as United Airlines, filed for bankruptcy protection, leading to huge losses by UAL’s creditors. Those creditors included UAL’s pensioners when UAL’s pension plans were terminated and taken over by the Pension Benefit …
Complex capital structures are prevalent in many recent high-profile Chapter 11 bankruptcy cases. One recent example is Toys ‘R’ Us, whose debt structure was, as characterized by Bloomberg Businessweek, “as complex and precarious as a Jenga tower. [1]” It …