Insights Past Issues
- Client AlertDecember 11, 2018
The state of Colorado initiated two lawsuits against online lending platforms. The suits alleged that the platforms had violated the state’s Uniform Consumer Credit Code by charging interest and some fees in excess of those allowed under Colorado law and that the consumer loan agreements utilized a non-Colorado governing law provision, also in violation of the law.
- White PaperOctober 2018
This desk reference is intended to provide an in-depth analysis of the numerous issues affecting an equipment lessor when dealing with a lessee after it has filed for bankruptcy protection.
- Client AlertJuly 9, 2018
On June 14, the Board of Governors of the Federal Reserve System issued a final rule that establishes credit limits for single counterparties of US bank holding companies and foreign banking organizations with $250 billion or more in assets, and US intermediate holding companies of covered FBOs with $50 billion or more of consolidated assets.
- Client AlertBasel Committee Issues Simple, Transparent and Comparable Securitisation Framework for Short-Term SecuritisationsMay 17, 2018
On May 14, the Basel Committee on Banking Supervision issued two documents entitled “Criteria for Identifying Simple, Transparent and Comparable Short-Term Securitisations” and “Capital Treatment for Simple, Transparent and Comparable Short-Term Securitisations.”
- Client AlertBasel Committee Issues Simple, Transparent and Comparable Securitisation Framework for Short-Term SecuritisationsMay 14, 2018
Today, the Basel Committee on Banking Supervision issued two documents entitled “Criteria for Identifying Simple, Transparent and Comparable Short-Term Securitisations” and “Capital Treatment for Simple, Transparent and Comparable Short-Term Securitisations.”
- White PaperMarch 2018
Chapman’s "Defaulted Securities: The Guide for Trustees and Bondholders" advances understanding and consideration of issues related to trustees and bondholders in both corporate and municipal financings.
- ArticleJournal of Taxation of Financial ProductsMarch 2018
This article describes the impact of the Tax Cuts and Jobs Act on securitization transactions. The article addresses in detail the new limitation on the deduction for business interest expense as well as the requirement that the transferee of an equity interest in a partnership engaged in a US trade or business withhold 10% of the amount realized unless the transferor certifies that it is a US person.
- Client AlertDC Circuit Court of Appeals Holds That Open Market CLO Managers Do Not Have to Comply With Dodd-Frank Risk Retention RequirementsFebruary 9, 2018
The US Court of Appeals for the District of Columbia Circuit recently issued a decision in a case that involved a question of whether the risk retention requirements imposed by Section 941 of the Dodd-Frank Act required open market CLO managers to retain risk in those transactions they managed.
- Client AlertFirst Circuit’s Old Cold Decision Cools Fears of Expanded Scope of Jevic’s Reach; Declines to Apply Jevic to Disturb Assumption of Liabilities in 363 Sale that may have Violated Absolute Priority RuleFebruary 7, 2018
Czyzewski v. Jevic Holding Corporation made some court-watchers nervous that the decision would be applied broadly to disturb other bankruptcy-related distributions.
- ArticleLaw360February 5, 2018
In bankruptcy cases where a not-for-profit corporation is closely related to or controlled by a governmental unit, a creditor may challenge the not-for-profit corporation’s bankruptcy eligibility, arguing that the not-for-profit corporation is, in substance, a “governmental unit” and therefore not eligible to file a Chapter 11 petition.
- ArticleLaw360January 22, 2018
On January 11, the Third Circuit issued a decision in a case that limited the reach of the Rooker-Feldman doctrine as a defense to bankruptcy avoidance actions. The court’s reasoning, however, has implications that go well beyond the particular facts of the case.
- Client AlertJanuary 11, 2018
As state and local governments seek more creative financing methods for economic development projects, some have turned to the formation of subsidiary entities that can provide financing assistance, potentially without triggering debt limits under state or local laws or violating covenants under existing financings.
- Client AlertDecember 21, 2017
On December 20, Congress passed the act commonly referred to as the Tax Cuts and Jobs Act of 2017. Although no provision of the Act was designed specifically to address securitization transactions, two new sets of rules are likely to have significant effects on at least some securitization transactions
- Client AlertLife is Not a Bowl of Cherries for PACA Claimant Objecting to Cash Collateral Use: In re Cherry Growers, Inc.November 27, 2017
A debtor-in-possession is entitled to use cash collateral over the objections of PACA claimants so long as the debtor demonstrates that the interests of the PACA claimants are adequately protected, according to a recent ruling by Judge Dales of the United States Bankruptcy Court for the Western District of Michigan.
- Client AlertNovember 3, 2017
On November 2, Representative Kevin Brady released the proposed text of the long-awaited federal income tax reform bill. The bill also includes a provision that creates a limit on the deductibility of interest. If enacted, this provision could have potentially wide-reaching impacts on securitization transactions.
- Client AlertSecond Circuit Reverses MPM Silicones’ “Prime Plus” Formula for Cramdown Interest Rates, Delivering Secured Creditors a Welcome Victory and Resetting Market ExpectationsOctober 30, 2017
The U.S. Court of Appeals for the Second Circuit reversed both the district court and the bankruptcy court’s decisions in MPM Silicones, LLC, which had held that the “prime plus” formula was the appropriate method for determining the interest rate required in connection with new notes issued to secured creditors under a Chapter 11 cramdown plan of reorganization.
- Client AlertMomentive vs EFIH: Second Circuit Splits with Third Circuit on Make-Whole; Keeps Pressure on Lenders to Negotiate Express Make-Whole ProvisionsOctober 30, 2017
The United States Court of Appeals for the Second Circuit has affirmed the district court and the bankruptcy court’s determinations in MPM Silicones, LLC that Momentive’s senior noteholders are not entitled to recover any make-whole premium on account of the replacement of their notes.
- ArticleMake-Whole Update: Texas Bankruptcy Court Awards Unsecured Bondholders’ ‘Enormous’ Make-Whole Claim, with Interest, Over Solvent Debtors’ ObjectionOctober 19, 2017 (Originally Published October 4, 2017)
On September 21, a Bankruptcy Court ruled that holders of notes issued pursuant to a Note Purchase Agreement entered into by a debtor’s operating subsidiary were entitled to what the court termed an ‘enormous’ make-whole payment, post-petition interest, and recovery of related fees and expenses.
- Client AlertOn Second Thought: Delaware Bankruptcy Court Denies $275 Million Breakup Fee Despite Earlier ApprovalOctober 19, 2017
On October 3, the U.S. Bankruptcy Court for the District of Delaware granted a motion to reconsider a decision it made over a year ago in the bankruptcy of Energy Future Holdings Corp. and its co-debtors and in doing so disallowed a $275 million breakup fee to a prospective asset purchaser that it had previously approved.
- ArticleLaw360October 18, 2017
On October 3, 2017, the U.S. Bankruptcy Court for the District of Delaware granted a motion to reconsider a decision it made over a year ago in the bankruptcy of Energy Future Holdings Corp. and its co-debtors and in doing so disallowed a $275 million breakup fee to a prospective asset purchaser that it had previously approved.
- ArticleBasel Committee Proposes Simple, Transparent and Comparable Securitisation Framework for Short-Term SecuritisationsPratt's Journal of Bankruptcy LawOctober 2017 (Originally Published July 27, 2017)
On July 6, 2017, the Basel Committee on Banking Supervision issued two consultative documents entitled “Criteria for Identifying Simple, Transparent and Comparable Short-Term Securitisations” and “Capital Treatment for Simple, Transparent and Comparable Short-Term Securitisations.”
- ArticlePratt's Journal of Bankruptcy LawSeptember 2017 (Originally Published June 25, 2017)
Many equipment lessors are watching yesterday’s prime customers transform into tomorrow’s distressed credits. This article addresses some of the key considerations for lessors in formulating a plan to deal with distressed or likely-to-be-distressed lessees, both prior to and during a potential bankruptcy proceeding.
- White PaperAugust 2017
Keeping track of the regulatory developments affecting asset-backed commercial paper (“ABCP”) conduits and their sponsors is a daunting task. This updated desk reference reviews regulatory and legislative developments affecting the ABCP market.
- ArticleLaw360August 25, 2017
On August 3, 2017, the Delaware district court upheld the Delaware bankruptcy court’s confirmation of a so-called “gift” plan (i.e., a plan in which a secured creditor class “gifts” a portion of its plan distribution to a junior class).
- Client AlertAugust 24, 2017
On August 3, the Delaware district court in In re Nuverra Environmental Solutions, Inc. upheld the Delaware bankruptcy court’s confirmation of a so-called “gift” plan, notwithstanding the recent Supreme Court decision in Czyzewski v. Jevic Holding Corp. that had cast doubt on the viability of such plans.
- Client AlertJune 14, 2017
On June 12, the Department of Treasury issued the first report in a series regarding regulation of the financial system in a manner consistent with Core Principles set forth in Executive Order 13772 signed by President Trump on February 3, 2017.
- Client AlertSixth Circuit Holds That a Perfected Assignment of Rents Precludes a Debtor’s Use of Rents as Cash CollateralMay 23, 2017
In a recent case, the Sixth Circuit held that under Michigan law a properly perfected assignment of rents bars a debtor from using the rents to fund its operations in a Chapter 11 reorganization.
- ArticleLaw360April 13, 2017
On March 27, the U.S. Supreme Court granted certiorari in the case of In re the Village at Lakeridge LLC, under which an appeals court held that a claim of an “insider,” which is not counted for the purpose of creating an accepting impaired class for the purpose of “cramming down” a plan of reorganization over the opposition of a rejecting class, does not retain its status as a claim of an insider for that purpose once transferred to a noninsider third party.
- Client AlertNot Just Boilerplate — The Importance of Always Verifying a Forum Selection Clause in a Commercial ContractMarch 9, 2017
In a stark reminder to the bankruptcy community of the old adage that “you can run but you can’t hide,” the U.S. Bankruptcy Court for the Southern District of New York recently denied an Austrian bank’s motion to dismiss for lack of personal jurisdiction.
- ArticleLaw360November 22, 2016
In a break from recent decisions, on November 17, the Third Circuit Court of Appeals reversed the District Court’s decision in the Energy Future case, finding that make-whole premiums were in fact payable upon a “redemption” even if such redemption occurred after a bankruptcy filing and the automatic acceleration of the underlying debt where the applicable indentures did not otherwise provide.
- ArticlePratt's Journal of Bankruptcy LawNovember/December 2016 (Originally Published August 31, 2016)
A recent bankruptcy court decision in the Aéropostale bankruptcy case pending in the bankruptcy court for the Southern District of New York may provide some comfort to secured creditors seeking to credit bid in a sale process commenced by a debtor pursuant to Section 363 of the U.S. Bankruptcy Code.
- ArticleAIRA JournalJune 2016
This article discussed leveraged lending guidelines, unitranche facilities and the risks associated with unitranche facilities, including with respect to “agreements among lenders” as illustrated by the recent case of In re Radio Shack Corporation.
- Client AlertMake-Whole Update: Delaware Bankruptcy Court Rules Intercreditor Agreement Does Not Permit First Lien Noteholders to Demand Payment of Previously Disallowed Make‑Whole from Junior NoteholdersJune 27, 2016
On June 3, 2016, the United States Bankruptcy Court for the District of Delaware ruled that the intercreditor agreement between first lien noteholders and junior noteholders in In re Energy Future Holdings Corp. did not require the junior noteholders to bear the cost of a previously disallowed make-whole payment to the first lien noteholders.
- Client AlertAre You an Over-Secured Lender in Your Borrower’s Bankruptcy? Beware: You May Still Not Be Entitled to Receive Post-Petition InterestMay 26, 2016
It is a basic principle in bankruptcy that a secured lender is entitled to receive interest and other charges arising post-petition to the extent the lender is over-secured. A recent decision challenges this principle in cases where the value of a lender’s collateral diminishes during the course of the bankruptcy case.
- ArticleLaw360May 25, 2016
A recent decision issued by a federal district court in North Carolina challenges the familiar principle that in a borrower’s bankruptcy, the lender, if it is oversecured as of the bankruptcy filing date, is entitled to receive post-petition interest, attorneys’ fees and other charges arising post-petition to the extent of the value of its collateral.
- Client AlertThe Seventh Circuit Ups the Ante in an Instructive Decision Affirming the Power of Bankruptcy Courts to Stay LitigationPratt's Journal of Bankruptcy LawApril/May 2016 (Originally Published January 22, 2016)
Pratt's Journal of Bankruptcy Law republished a Chapman Client Alert.
- Client AlertMake-Whole Update: Delaware District Court Follows New York’s Lead in Disallowing Make-Whole Premium in Bankruptcy — Dispute Moves to Third CircuitFebruary 29, 2016
On February 16, 2016, the District Court for the District of Delaware affirmed the decision of the Delaware bankruptcy court in In re Energy Future Holdings Corp., that noteholders’ claims for make-whole premiums may be blocked by the automatic stay of the U.S. Bankruptcy Code.
- Client AlertThe Next Compliance Hurdle under Regulation AB II: Annual Compliance Checks to Determine Continued Shelf EligibilityClient AlertFebruary 23, 2016
In this article, we provide a brief overview of the key reforms under Regulation AB II, followed by a more focused review of the next compliance hurdle that ABS issuers will face — annual compliance checks to determine continued shelf eligibility.
- ArticleLaw360February 18, 2016
On Feb. 8, 2016, the United States Court of Appeals for the Ninth Circuit held that a claim of an “insider,” which is not counted for the purposes of creating an accepting impaired class for confirmation of a contested plan of reorganization, does not retain insider status once transferred to a third party that is not an insider.
- ArticleJournal of Taxation and Regulation of Financial InstitutionsNovember/December 2015
This article examines the current treatment of default interest by bankruptcy courts and analyzes how a creditor’s claim for default interest could be treated as part of a chapter 11 plan process.
- ArticleLaw360November 12, 2015
On November 2, 2015, the Delaware bankruptcy court ruled that where a majority of bondholders direct an indenture trustee to withdraw its confirmation objections, the remaining minority who did not file independent objections to confirmation may not step in to press the indenture trustee’s objections.
- Client AlertSo Long as It’s Your Own Money — Third Circuit Allows Secured Creditors to Gift Value to Junior Creditors to Resolve Sale Objection Even When More Senior Creditors Receive NothingSeptember 24, 2015
In a decision that may ease the resolution of future bankruptcy proceedings, the Third Circuit Court of Appeals affirmed a bankruptcy court’s approval of a sale of substantially all of a debtors’ assets based on a settlement in which the secured creditors gifted funds to general unsecured creditors.
- Client AlertUnitranche Facilities and the Jurisdiction of Bankruptcy Courts: RadioShack's Chapter 11 Leaves Questions UnansweredAugust 13, 2015
Though the RadioShack proceeding sheds light on how bankruptcy courts may interpret an agreement among lenders, unfortunately, it still remains unclear as to whether U.S. bankruptcy courts will assert jurisdiction to consider arguments arising under an agreement among lenders.
- ArticleLaw360July 30, 2015
On July 13, 2015, the United States Court of Appeals for the Eleventh Circuit reversed lower court orders that had precluded a lender from collecting accrued default interest from a debtor as a condition for reinstatement of the loan under a confirmed plan of reorganization.
- ArticleLaw360July 24, 2015 (Originally Published June 15, 2015)
Law360 republished a Chapman Client Alert.
- Client AlertAnother One Bites the Dust — Energy Future Decision Likely Precludes Future Arguments to Lift the Automatic Stay in the Make-Whole ContextJuly 23, 2015
Recently, before awarding bondholders any amounts on account of a make-whole provision upon a debt prepayment, courts have repeatedly insisted on clear language in the credit documents requiring such payment notwithstanding a bankruptcy filling and a related automatic acceleration.
- ArticleS.D.N.Y Affirms MPM Silicones' "Prime Plus" Formula for Cramdown Interest Rates, Likely Harming Creditor RecoveriesPratt's Journal of Bankruptcy LawJuly/August 2015
Pratt's Journal of Bankruptcy Law published an article written by Chapman attorneys.
- Client AlertClient AlertJuly 2, 2015
The U.S. Supreme Court’s 6-3 split decision in Baker Botts LLP v. Asarco LLC will have long standing implications for all bankruptcy professionals’ compensation, potentially making it much more costly for all professionals retained in chapter 11 cases.
- Chapman InsightsChapman InsightsJune 30, 2015
The purpose of this article is to provide a general overview of how royalty-backed securitizations work and to encourage further use of royalty-backed securities by leaders in the music, business, and financial industries.
- Client AlertCan You Vote More Than Once? The Bankruptcy Code’s Current “Numerosity” Standard Under § 1126(c) and Possible ReformClient AlertJune 15, 2015
Under current law, affiliated creditors holding debt arising from the same loan transaction will not likely be lumped together when determining the number of creditors that have voted to approve or reject a plan, particularly where such affiliates held such debt prior to a bankruptcy filing and assert their claims through separate proofs of claim.
- White PaperWhite PaperJune 2015
On December 8, 2014, the American Bankruptcy Institute Commission to Study the Reform of Chapter 11 released its Final Report and Recommendations for amendment to the current Bankruptcy Code. The proposals are significant, and on the whole, largely harmful to the rights of secured creditors.
- Client AlertS.D.N.Y. Affirms MPM Silicones' "Prime Plus" Formula for Cramdown Interest Rates, Likely Harming Creditor RecoveriesClient AlertMay 18, 2015
The United States District Court for the Southern District of New York recently affirmed the Bankruptcy Court’s decision in In MPM Silicones, LLC, establishing Judge Drain’s “prime plus” formula as the appropriate interest rate required in connection with new notes issued to secured creditors under a cramdown plan of reorganization in the Southern District of New York.
- Client AlertClient AlertMay 12, 2015
This is the fifth installment of Chapman and Cutler LLP’s discussion of the proposals contained in the Final Report and Recommendations of the American Bankruptcy Institute’s Commission to Study the Reform of Chapter 11.
- Client AlertDoes Your Intercreditor Agreement Properly Protect You? Common Mistakes and How to Fix Them — Lessons Learned From the MPM Silicones and RadioShack CasesClient AlertMay 5, 2015
In order to avoid future intercreditor disputes, investors can learn from past mistakes and draft or revise their intercreditor agreements accordingly. In this Client Alert, we attempt to highlight a number of specific considerations that may improve intercreditor agreements, to better achieve their intended purpose of delineating the respective priorities and rights of senior and junior secured creditors while avoiding intercreditor conflict.
- Client AlertFebruary 2, 2015
This is the fourth installment of Chapman’s discussion of the proposals contained in the American Bankruptcy Institute’s Final Report and Recommendations to amend the Bankruptcy Code.
- Client AlertClient AlertJanuary 27, 2015
One of the well-known benefits of bankruptcy is that assets can be sold free and clear of claims and interest in the property. But unknown future claims have presented difficulties for purchasers of assets in bankruptcy sales and courts have struggled to devise a clear rule for dealing with such claims.
- Client AlertTwin Daggers: Proposed 363(x) Amendments and Revisions to Adequate Protection Provisions Would Significantly Erode Secured Creditors’ RecoveriesClient AlertJanuary 15, 2015
As discussed in our first two installments, the American Bankruptcy Institute released its Final Report and Recommendations containing proposals to modify the Bankruptcy Code, many of which will have significant and negative implications for secured creditors.
- Client AlertClient AlertJanuary 5, 2015
As discussed in our first installment, the American Bankruptcy Institute released its Final Report and Recommendations containing proposals to modify the Bankruptcy Code, many of which will have significant and negative implications for secured creditors.
- Client AlertThe ABI Commission on Reform of Chapter 11 Issues Final Report: What Secured Creditors Need to UnderstandClient AlertDecember 17, 2014
Last week, the American Bankruptcy Institute Commission to Study the Reform of Chapter 11 released its Final Report and Recommendations for amendment to the current Bankruptcy Code.
- White PaperOctober 2014
Chapman and Cutler attorneys have been monitoring decisions and developments with respect to creditors' rights and have compiled the client alerts published to date that provide important insight regarding the implications of these decisions for holders of secured debt and highlight what every creditor should know in order to effect rights under its credit agreement.
- Client AlertMPM Silicones Latest Court to Whittle Away at Secured Creditor Protections: Plan Confirmed Providing Secured Creditors with Below Market Replacement NotesClient AlertSeptember 29, 2014
In an important bench ruling in the MPM Silicones case, Judge Robert Drain of the U.S. Bankruptcy Court for the Southern District of New York has provided debtors with a potentially coercive tool to use as leverage against their secured creditors.
- Chapman InsightsSeptember 10, 2014
In August 2014, the SEC adopted final rules under Regulation AB that substantially revise the offering process, disclosure and reporting requirements for offerings of ABS. More than four years after the SEC originally published its comprehensive "Regulation AB II" rule proposals, and after two partial re-proposals in 2011 and 2014, the final rules implement several key areas of reform but defer action on other significant aspects of the original proposals.
- Client AlertChapman SidebarSeptember 4, 2014
As prices for distressed loans have risen, holders of secured claims are focusing not only on the recovery of principal but also on repayment of interest, fees and pre-payment-premiums or “make whole” payments.
- ArticleThe Harvard Law School Forum on Corporate Governance and Financial RegulationAugust 4, 2014
The Harvard Law School Forum on Corporate Governance and Financial Regulation posted an article based on a recent Chapman Sidebar.
- Client AlertPratt's Journal of Bankruptcy LawJuly/August 2014 (Originally Published May 22, 2014)
Pratt's Journal of Bankruptcy Law republished a Chapman Client Alert.
- Client AlertChapman SidebarJuly 18, 2014
Given today’s low interest rate environment, the enforceability of make-whole provisions has been the subject of intense litigation as debtors seek to redeem and refinance debt entered into during periods of higher interest rates, and investors seek to maintain their contractual rates of return. This trend has come to the forefront most recently in two separate cases, one filed in Delaware and the other in New York.
- Client AlertClient AlertFebruary 12, 2014
The right of a secured creditor to “credit bid” (i.e., to bid the amount of debt owed rather than cash) in a debtor’s sale of assets, once thought to be rock solid, is again under attack.
- Client AlertClient AlertNovember 25, 2013
Under current bankruptcy law, units of local government cannot voluntarily petition for municipal bankruptcy under Chapter 9 without express and specific authority from the state.
- Client AlertCommodity Pool Regulation of Securitization Vehicles – CFTC Staff Expands Prior Relief and Provides Broad Exclusion from Commodity Pool Definition; Also Provides No Action Relief for Legacy Transactions and Extension of CPO Registration Deadline to MarchChapman Clint AlertDecember 21, 2012
By letter dated December 7, 2012, the Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission released interpretive guidance significantly expanding the scope of its October 11, 2012 interpretive letter. The October 11 Letter confirmed that securitization vehicles that satisfy five criteria, including a requirement that they operate consistent with either Regulation AB or Rule 3a-7 under the Investment Company Act of 1940, should not be “commodity pools” as a result of holding a swap nor should their operators be required to register as “commodity pool operators” under the Commodity Exchange Act and CFTC rules.
- Client AlertCFTC Staff Confirms that Certain Securitizations are Not Commodity Pools and Extends Registration Deadline for Certain Commodity PoolsClient AlertOctober 19, 2012
By letter dated October 11, 2012, the Division of Swap Dealer and Intermediary Oversight of the Commodity Futures Trading Commission 1 released interpretive guidance confirming that certain securitization vehicles should not be included within the definition of “commodity pool” and that operators of such vehicles should not be included within the definition of “commodity pool operator” under the Commodity Exchange Act and CFTC rules. Separately, in a no-action letter dated October 11, 2012, the Division conditionally extended the deadline for registration as a commodity pool operator from October 12, 2012 to December 31, 2012 for vehicles that are commodity pools solely by virtue of their involvement with swaps.