Sky Blog
Responses to financial crises can have the unfortunate effect of creating “zombie” firms, companies whose operating profits are insufficient to cover their debt service. These companies would probably have gone bankrupt without the forbearance of banks or regulators or other …
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 …
Priming transactions have been increasing in frequency during the current pandemic restructuring cycle. Priming usually involves the debtor shifting collateral and assets away from their core lending group to support new tranches of debt that are structurally or directly senior …
On 20 May 2020, the U.K. government published the Corporate Insolvency and Governance Bill (the bill), which includes measures designed to help businesses through the COVID-19 pandemic and features important substantive reforms to U.K. restructuring law, whose introduction has been …
The COVID-19 pandemic is causing financial distress to economically viable firms on an unprecedented scale. In this post, we introduce the novel idea of creditor cooperation duties to stabilize corporate workouts.
The prospect of widespread defaults by viable firms triggered …
On November 2, 2017, President Maduro of the Bolivarian Republic of Venezuela announced the creation of a presidential commission, headed by Vice President El Aissami, for the “refinancing and restructuring” of Venezuela’s external debt, estimated at between US$100-150 billion.1…
Last year was an active but uneven one in the world of corporate bankruptcy and restructuring. On the one hand, default rates in the U.S. remained at relatively muted levels, with the continuation of low interest rates and strong (if …
In a December 22, 2016, decision in the long-running Argentine debt litigation, the United States District Court for the Southern District of New York spelled out significant limitations on prior rulings it had issued that were based on the pari …
Valuation, solvency, and adequate capitalization analyses play a crucial role in the process of reorganizing U.S. companies in bankruptcy. They are central to allowance of claims, adequate protection, avoidance actions such as fraudulent transfer and preference, rejection …
Much has been written and spoken in the immediate aftermath of the UK’s EU referendum about what the UK must do to leave the EU. We look at the key questions in this area, such as whether the UK has …
In two previous posts,[1] I described the financial industry’s “single point of entry” (SPOE) strategy for resolving failed megabanks. The SPOE approach – which has been endorsed by the Federal Reserve Board (Fed) and other regulators – could be …
After languishing relatively disused for nearly eighty years, municipal bankruptcy is part of the new normal. The eyes of the nation were riveted on Detroit, and smaller filings across the country have proliferated in recent years. As Warren Buffett has …
The Treasury Department and the Internal Revenue Service have announced (in Notice 2015-59) that they are studying issues related to the qualification of certain corporate distributions as tax-free under Section 355 of the Internal Revenue Code in situations involving …
If there is one simple lesson from the crisis that we all can embrace, it is that no financial institution in America should be so big or complex that its failure would put the financial system at risk.1 Congress …
On May 4, 2015, the District Court for the Southern District of New York affirmed Bankruptcy Judge Robert D. Drain’s ruling confirming the chapter 11 plan of MPM Silicones, LLC. The holdings of the District Court and the Bankruptcy Court …
The Commonwealth of Puerto Rico’s efforts to deal with more than $70 billion in debt have been a magnet for media scrutiny during the last two years. A question frequently asked in connection with the island territory’s struggles to stay …
In Marblegate Asset Management v. Education Management Corp. (S.D.N.Y. 2014), the Southern District of New York found that a proposed out-of-court debt restructuring to the detriment of non-consenting creditors likely violated provisions of the Trust Indenture Act of 1939 …
With the adoption of the Single Resolution Mechanism (SRM) the European Union (EU) established the second crucial pillar of the European Banking Union (EBU), further promoting the financial stability and efficiency of the European …
Thomas Jackson famously described the role of all bankruptcy law as reducing the incentive for individual enforcement against the assets of a distressed company.[1] Although scholars have debated other aspects of Jackson’s thesis, most have continued to identify with this …