Insights

The Year in Bankruptcy: 2014

The Year in Bankruptcy: 2014

Compared to much of the rest of the world, the United States had the most positive economic, business, and financial news in 2014. Developments abroad were less hopeful, with Europe and Japan backsliding into recession, China's economic growth stagnating, Russia staggering under the weight of international sanctions for its meddling in Crimea and Ukraine, Argentina defaulting on its sovereign debt for the second time in 13 years, Venezuela brought to its knees by plummeting crude oil prices, regions of the Middle East ravaged by civil war and Islamic militants, and West Africa devastated (physically and economically) by the impact of Ebola.

Unlike in 2013, when the "fiscal cliff" loomed large and the U.S. government was shut down for 16 days in an all-out war over the implementation of the Affordable Care Act, lawmakers agreed not once, but twice, in 2014 to trillion-dollar-plus spending plans to finance the government. However, after the November mid-term elections gave Republicans control of both Houses of Congress for the first time in eight years, it remains to be seen whether any degree of bipartisanship will be possible during the final years of the Obama presidency. Among other things, executive orders implementing unilateral action on immigration reform and the normalization of relations with Cuba, as well as a fundamental disagreement on energy policy, make cooperation among lawmakers unlikely.

Janet Yellen was sworn in as the first female Chair of the U.S. Federal Reserve in February 2014, with the avowed intention of keeping interest rates low until the U.S. unemployment rate retreated further from the level of 6.7 percent achieved at the end of 2013. Mission nearly accomplished—the unemployment rate closed out 2014 at 5.6 percent (the lowest since 2008)—after the strongest year of job growth since 1999, and the Fed officially ended the final round of its quantitative easing ("QE3") bond-buying program, first implemented during the financial crisis at the end of October. Interest rates, however, are expected to remain at rock bottom at least during the first quarter of 2015.

Nearly every measure of U.S. economic growth was positive at the end of 2014. According to government data released on December 23, the U.S. economy grew at its fastest rate in more than a decade from July through September—the latest sign that the economic recovery is running full speed ahead. The U.S. Commerce Department reported in October that gross domestic product ("GDP") growth hit an annualized rate of 5 percent in the third quarter, a rate of expansion not seen since 2003.

The U.S. budget deficit dropped to $483 billion at the end of September (the fiscal year, or "FY") and stood at $488 billion at the end of the calendar year ("CY") 2014, the lowest level in six years. As a percentage of GDP, the deficit fell to 2.8 percent, the lowest level since 2007. The deficit reached a record $1.4 trillion in 2009.

An accelerating U.S. economy trumped problems overseas to lift the U.S. stock market to new highs in 2014. The Standard & Poor's ("S&P") 500 Index closed out 2014 with a gain of 11.39 percent. The Dow Jones Industrial Average (which surged above 18,000 for the first time on December 23) closed up 7.52 percent for 2014, while the NASDAQ Composite Index ended up 13.4 percent. According to S&P Ratings Services, the 70-month run-up in U.S. markets beginning in early 2009 is the fourth-longest bull market since World War II. U.S. stocks were bolstered in 2014 by accelerating economic recovery, strong earnings growth, and the Fed's decision to keep interest rates low even though it ended QE3. Low bond yields mean that companies can continue to borrow cheaply.

The year 2014 was one of the best for mergers and acquisitions since the financial crisis. Some 40,298 transactions—worth nearly $3.5 trillion—were announced worldwide in 2014, according to Thomson Reuters. It was the biggest year for such deals since 2007.

Among the most memorable business, economic, and financial sound bites of 2014 were "QE taper," "bitcoin," "polar vortex," "Thomas Piketty," "GM Switchgate," "Detroit's grand bargain," "corporate tax inversions," and "Cuba normalization."

Bankruptcy Filings

Business bankruptcy filings continued a downward trend in 2014. The Administrative Office of the U.S. Courts reported that business bankruptcy filings in FY 2014 totaled 28,319, down 19 percent from the 34,892 business filings in FY 2013. Chapter 11 filings totaled 7,658 in FY 2014, down 20 percent from 9,564 in FY 2013.

The data for bankruptcy filings in CY 2014 paint a similar portrait. According to Epiq Systems, total commercial bankruptcy filings during CY 2014 were 34,455, a 22 percent drop from the 44,083 filings during CY 2013. Chapter 11 business filings were 5,172 for 2014, compared to 6,598 for 2013. There were 21,211 chapter 7 commercial filings in 2014, compared to 27,662 for 2013. Fifty-nine chapter 15 petitions were filed on behalf of foreign commercial debtors in CY 2014, compared to 82 in CY 2013 and 116 in CY 2012. Ten municipal debtors filed for chapter 9 protection in CY 2014, compared to nine in CY 2013 and 20 in CY 2012.

The number of bankruptcy filings by "public companies" (defined as companies with publicly traded stock or debt) in 2014 was 52, according to data provided by New Generation Research, Inc. ("NGR"). It was the smallest number of public bankruptcy filings since at least 1980 (and perhaps ever, according to NGR). There were 71 public-company filings in 2013, whereas 87 public companies filed for bankruptcy in 2012. At the height of the Great Recession, 138 public companies filed for bankruptcy in 2008 and 211 in 2009. The combined asset value of the 52 public companies that filed for bankruptcy in 2014 was $71.8 billion. For the third straight year, the health-care and medical sector claimed the largest number of bankruptcies, followed by oil and gas, retail, telecommunications, transportation, banking and finance, and electronics.

The year 2014 added 11 public-company names to the billion-dollar bankruptcy club, compared to 10 in 2013. Counting private-company and municipal filings, the billion-dollar club gained 13 members in 2014.

The largest bankruptcy filing of 2014—Energy Future Holdings Corp., with $41 billion in assets—was the eighth-largest public filing of all time, based upon asset value.

Twelve public and private companies with assets greater than $1 billion exited from bankruptcy in 2014—including six of the 13 billion-dollar public and private companies that filed in 2014. Continuing a trend begun in 2012, more of these companies reorganized than were liquidated or sold. Notable among them was chemical conglomerate W.R. Grace & Co., which emerged from chapter 11 on February 3, 2014, more than 12 years after filing for bankruptcy protection to deal with billions of dollars in asbestos liabilities.

The year 2014 saw the denouement of the largest bankruptcy filing by a U.S. city ever—Detroit—which obtained confirmation of a sweeping "grand bargain" chapter 9 plan of adjustment on November 7, 2014, that eliminates more than $7 billion in debt while rehabilitating crippled city services and leaving retiree pensions and health-care benefits largely intact.

Calls for U.S. bankruptcy reform figured prominently in 2014. On December 8, 2014, the American Bankruptcy Institute Commission to Study the Reform of Chapter 11 issued its long-awaited Final Report and Recommendations. The comprehensive overhaul proposals, which will be presented to Congress in 2015, include sweeping changes to the Bankruptcy Code that are deemed necessary as a consequence of, among other things, changes in the way businesses are financed and escalating administrative costs.

The Federal Deposit Insurance Corporation (the "FDIC") shuttered 18 banks in 2014, compared to 24 in 2013. This represents the lowest number of bank failures since 2007. There were 157 bank failures in 2010 and 140 in 2009, during the height and immediate aftermath of the Great Recession.

The long-running dispute over payment of Argentina's sovereign debt continued to play out in agonizing detail throughout 2014, with Argentina losing at all levels of the U.S. judicial system in its pitched battle with holdout bondholders from its 2005 and 2010 debt restructurings. After the U.S. Supreme Court refused to review lower court rulings prohibiting Argentina from making payments on restructured debt without also paying holdout bondholders, Argentina on July 30, 2014, defaulted on its sovereign debt for the second time in approximately 13 years. It did so again on October 30, 2014. The battle between Argentina and "vulture fund" holdouts prompted calls in the United Nations and elsewhere for international legislation to restrict "predatory lending practices" that make sovereign debt defaults more likely.

Top 10 Bankruptcies of 2014

The composition of the Top 10 List of public bankruptcy filings for 2014 indicates that the U.S. has largely left behind the fraud, excess, abuse, and improvidence that dominated the bankruptcy landscape during the 2007‒08 financial crisis and the ensuing Great Recession. Continuing a trend that began in 2012, only a single representative from the banking and financial services industry made the cut. The remainder reflect more recent market-driven developments, including a drop in cargo shipping rates worldwide (two companies) and plunging fossil fuel, electricity, and nuclear power prices (four companies). Other debtors on the Top 10 List for 2014 were undone by product/infrastructure obsolescence, slowing economic growth abroad, and faulty product design. Each company gracing the Top 10 List for 2014 entered bankruptcy with assets valued at more than $1 billion. Five of the 10 both filed for and emerged from bankruptcy in 2014—all but one as a reorganized entity (owned, with a single exception, by creditors). Half of the companies on the Top 10 List filed prenegotiated or prepackaged chapter 11 cases.

Dallas, Texas-based Energy Future Holdings Corp. ("Energy Future") surged into the No. 1 spot on the Top 10 List for 2014 when it filed for chapter 11 on April 29, 2014, in the District of Delaware with $41 billion in assets and $49 billion in debt. Following months of speculation over when it would file, the private equity-backed electricity provider filed for bankruptcy to implement a restructuring that would split the company between groups of creditors and eliminate more than $26 billion in debt. Formerly known as TXU Corp., Energy Future in 2007 was the subject of what was then the largest leveraged buyout ever. It was undone by a staggering debt load and plunging electricity rates caused by a free fall in natural gas prices, as hydraulic fracturing of shale rock unleashed a glut. Energy Future's chapter 11 case is the eighth-largest public chapter 11 case ever filed by asset value.

NII Holdings, Inc. ("NII"), a Reston, Virginia-based telecommunications company with 13,600 employees, grabbed spot No. 2 on the Top 10 List for 2014 when it filed for chapter 11 protection in the Southern District of New York on September 15, 2014, with $8.7 billion in assets and $3.5 billion in debt. Through its subsidiaries, NII provides wireless communication services under the Nextel name in Brazil, Mexico, Argentina, and Chile. Formerly known as Nextel International, Inc., NII changed its name in December 2001 and emerged from bankruptcy in November 2002 following an earlier chapter 11 filing. Jones Day is representing NII and its affiliates in connection with their chapter 11 cases.

Genco Shipping & Trading Limited ("Genco") steamed into the No. 3 berth on the Top 10 List for 2014 when it filed for chapter 11 protection on April 21, 2014, in the Southern District of New York with nearly $3 billion in assets and $1.5 billion in debt. A New York, New York-based company with 1,518 employees, Genco is engaged in the worldwide ocean transportation of dry-bulk cargoes, including iron ore, coal, grain, and steel products, with a fleet of 53 vessels. Weakness in charter rates made it difficult for the company to pay its creditors. The shipping industry has suffered from a glut of vessels after buying too many before the 2008 global recession, driving down rates and saddling companies like Genco with too much debt. Genco emerged from bankruptcy on July 9, 2014, after the court confirmed a prepackaged chapter 11 plan that slashed the dry-bulk shipper's debt load by $1.2 billion. Under the plan, lenders swapped $1.06 billion in debt for 81.1 percent of the equity in the reorganized company.

Waterford, New York-based producer of silicone, quartz, and specialty ceramic products Momentive Performance Materials Inc. ("Momentive") sealed up the No. 4 spot on the Top 10 List for 2014 when it filed for chapter 11 protection on April 13, 2014, in the Southern District of New York with $2.7 billion in assets and $4.2 billion in debt. Private equity-controlled Momentive sells its products in the Americas, Europe, and Asia. The overleveraged company blamed its financial condition on the continued slowdown of economic growth abroad and on overcapacity in the industry, which has negatively impacted both its silicone and quartz businesses. Momentive filed for bankruptcy with a prenegotiated plan to cut its debt by $3 billion. The court confirmed the plan on September 11, 2014, and Momentive emerged from bankruptcy on October 24, 2014.

Nuclear fuel provider USEC, Inc. ("USEC") powered into the No. 5 position on the Top 10 List for 2014 when it filed for chapter 11 protection on March 5, 2014, in the District of Delaware with $2.3 billion in assets and more than $1 billion in debt. Maryland-based USEC provides low-enrichment uranium to nuclear power plants. It has been working to implement a new enrichment method to replace the outdated and expensive process it used previously, but it has been stymied by debt and liquidity issues as well as a slump in prices. Apart from its looming debt, USEC had been hurt by falling prices and demand in the wake of the 2011 Japanese tsunami, which saw Japanese nuclear plants go offline, and Germany's pledge to phase out nuclear power by 2022. The bankruptcy court confirmed a prenegotiated chapter 11 plan for USEC on September 5, 2014. Under the plan, noteholders and preferred stockholders swapped their securities for new notes and 95 percent of the new common stock in the reorganized company.

New York, New York-based Eagle Bulk Shipping Inc. ("Eagle Bulk") slipped into the No. 6 berth on the Top 10 List for 2014 when it filed for chapter 11 protection on August 6, 2014, in the Southern District of New York with $1.7 billion in assets and $1.2 billion in debt. Eagle Bulk is engaged in the ocean transportation of various bulk cargoes worldwide, including iron ore, coal, grain, cement, and fertilizers, with a fleet of 45 oceangoing vessels. Like many other shipping companies, Eagle Bulk struggled due to an overleveraged balance sheet and a drop in shipping rates since the financial crisis of 2007‒08. The company emerged from bankruptcy on October 15, 2014, after obtaining confirmation of a prenegotiated chapter 11 plan that awarded 99.5 percent of the equity in the reorganized company to creditors.

Houston-based Endeavour International Corporation ("Endeavour") drilled its way into the No. 7 spot on the Top 10 List for 2014 when it filed for chapter 11 protection in the District of Delaware on October 10, 2014, with $1.5 billion in assets and $1.2 billion in debt. Endeavour is an independent oil and gas company that acquires, explores, and develops energy reserves and resources in the United Kingdom North Sea and onshore in the United States. The company suffered from overleveraging and "unfavorable changes" in the economic and political climate for the industry, as well as natural disasters, volatile commodity prices, and unexpected delays in new oil and gas production due to operating difficulties in the North Sea. It filed for bankruptcy with a prenegotiated chapter 11 plan that will slash approximately $568 million in debt as part of a restructuring that involves the issuance of new notes to bondholders and a debt-for-equity swap.

First Mariner Bancorp ("FMB"), the holding company for 1st Mariner Bank, Baltimore's largest independent bank, with $925 million in deposits and 16 branches, crashed into the No. 8 position on the Top 10 List for 2014 when it filed for chapter 11 protection on February 10, 2014, in the District of Maryland for the purpose of selling its bank subsidiary. FMB, which was undercapitalized and out of compliance with federal and state banking regulations, auctioned off 1st Mariner Bank in bankruptcy in June 2014 to an investor group that agreed to recapitalize the bank with approximately $100 million, thereby avoiding a takeover by the Federal Deposit Insurance Corporation. FMB had $1.4 billion in assets at the time of the chapter 11 filing. The bankruptcy court confirmed a liquidating chapter 11 plan for FMB on December 9, 2014.

The No. 9 spot on the Top 10 List for 2014 was excavated by James River Coal Company ("James River"), a Richmond, Virginia-based mine operator in the U.S. Midwest and Appalachia. James River filed for chapter 11 protection for the second time on April 7, 2014, in the Eastern District of Virginia, with $1.2 billion in assets and $819 million in debt. The company struggled with a steep drop in prices and demand for both thermal and steelmaking coal. U.S. power companies have switched to cheaper natural gas, and excess supplies of metallurgical coal, which is used in steelmaking, have created a global surplus and depressed prices. James River is one of two major coal producers—the other is Patriot Coal Corp.—to have been pushed into bankruptcy in recent years by weak market conditions both in the U.S. and abroad, and more may be heading that way.

The final spot on the Top 10 List for 2014 belongs to GT Advanced Technologies Inc. ("GT"), a Manchester, New Hampshire-based company that provides materials and equipment for the solar, light-emitting diode (LED), and electronics industries worldwide. Formerly known as GT Solar International, Inc., GT operated the world's largest artificial-sapphire factory, located in Mesa, Arizona, until shortly after the plant's investor—Apple Inc.—decided not to use synthetic sapphire in its newest iPhones because it proved to be too brittle and tended to crack on impact. After Apple withheld a final $139 million prepayment on its supply contract with GT, the company shut down the sapphire factory. GT filed for chapter 11 protection on October 6, 2014, in the District of New Hampshire, with $1.2 billion in assets. The bankruptcy court approved a modified $439 million settlement between GT and Apple on December 15, 2014.

Other notable debtors (public, private, and foreign) in 2014 included the following:

Revel AC, Inc., owner and operator of the Revel Casino Resort ("Revel"), a Las Vegas-style, beachfront entertainment resort and casino located on the boardwalk in the South Inlet of Atlantic City, New Jersey, with 1,399 rooms and 3,500 gaming positions. Listing assets of $1.15 billion, the resort filed for chapter 11 protection in the District of New Jersey on June 19, 2014, for the second time in just over two years, with the goal of selling its assets (yet again). After the proposed sale of Revel for $110 million to the highest bidder at a bankruptcy auction fell through in early December, the bankruptcy court awarded the company to back-up bidder and real estate developer Glenn Straub for $95.4 million on January 5, 2015.

Ontario, Canada-based Essar Steel Algoma Inc. ("Algoma"), Canada's second-largest integrated steel producer, with $1.7 billion in assets and $2.1 billion in debt. Algoma's foreign representative filed a petition on July 17, 2014, in the District of Delaware seeking recognition under chapter 15 of the company's Canadian restructuring proceeding. The bankruptcy court entered an order recognizing Algoma's Canadian restructuring case on August 20, 2014, to give the company an opportunity to implement a restructuring agreement that will include an equity infusion of as much as $300 million from Algoma's ultimate corporate parent, Mumbai, India-based Essar Global Fund Ltd.

Privately held ITR Concession Company ("ITR"), operator of the 157-mile Indiana Toll Road, with more than $1 billion in assets and $6 billion in debt. ITR filed for chapter 11 protection on September 22, 2014, in the Northern District of Illinois to implement a prepackaged chapter 11 plan. Under the plan, which was confirmed by the bankruptcy court on October 28, 2014, a 10-month sale process for the company's assets—primarily a lease agreement for the toll road through 2081—is being overseen by a special committee of independent directors. Should ITR fail to secure a buyer, the plan includes a back-up option whereby the company will restructure its balance sheet by means of a debt-for-equity swap and $2.75 billion in new loans.

Cayman Islands-based Suntech Power Holdings Co. ("Suntech"), the Chinese solar panel maker that was formerly the world's largest maker of photovoltaic cells for solar energy production. Suntech's provisional liquidators filed a chapter 15 petition on February 21, 2014, in the Southern District of New York, seeking recognition of Suntech's Cayman Islands provisional liquidation proceeding. The bankruptcy court entered an order recognizing Suntech's Cayman Islands liquidation on November 17, 2014, despite objections from rival solar panel manufacturer Solyndra LLC that Suntech had unlawfully migrated its center of main interests to the Cayman Islands. Suntech's chapter 15 petition listed total assets exceeding $1 billion.

Bumi Investment Pte Ltd and two affiliates ("Bumi"), entities formed under Singapore law to raise funds for, and act as guarantors for the debts of, their corporate parent, Jakarta, Indonesia-based PT Bumi Resources, one of the world's largest thermal coal exporters. Bumi's foreign representative filed a chapter 15 petition on December 1, 2014, in the Southern District of New York, seeking recognition of Bumi's Singapore restructuring proceedings. The financial condition of PT Bumi Resources has deteriorated in recent years due to the decrease in the global demand for coal. Bumi listed more than $1 billion in assets and liabilities in its chapter 15 petition.

U.K.-based Yellow Pages company Hibu PLC ("Hibu"), whose foreign representative filed a chapter 15 petition on January 28, 2014, in the Eastern District of New York, seeking recognition of Hibu's U.K. restructuring proceedings. Hibu and its affiliates print Yellowbook in the U.S., Yellow Pages in the U.K., and Paginas Amarillas in Spain, as well as White Pages directories in Argentina and Chile. The internet has been unkind to traditional Yellow Pages companies, sending many into bankruptcy in recent years as customers migrated to digital devices. Hibu received U.K. court and Pensions Regulator approval in March 2014 of a scheme of arrangement that transferred ownership of the company to creditors. Hibu listed more than $1 billion in assets and liabilities in its chapter 15 petition.

Privately held MACH Gen LLC ("MACH Gen"), which owns and manages three natural gas-fired power plants in Arizona, Massachusetts, and New York. MACH Gen filed a prepackaged chapter 11 case on March 3, 2014, in the District of Delaware that listed $750 million in assets and $1.6 billion in debt. On April 11, 2014, the bankruptcy court confirmed the plan, which features a debt-for-equity swap for second-lien lenders that slashed $1 billion in debt. When it filed for bankruptcy, the Athens, New York-based company blamed a decline in power demand stemming from the economic downturn, as well as lower gas prices and greater supply of renewable energy projects.

Novelty gadgets and consumer products retailer Brookstone, Inc. ("Brookstone"), which filed for chapter 11 protection on April 2, 2014, in the District of Delaware. Brookstone proposed to sell its operations for $146 million to New Jersey-based stalking-horse bidder Spencer Spirit Holdings, Inc. ("Spencer"), a distributor of gag gifts, entertainment products, and Halloween items. Spencer, however, was outbid at auction by a consortium of Chinese investors, which offered $174 million for Brookstone with a pledge to keep open most of the company's 240 stores and to expand the retailer's brand into the U.K. and China. Brookstone, which cited the recession for its financial woes, obtained confirmation of its chapter 11 plan on June 24, 2014, and emerged from bankruptcy on July 8, 2014.

Sandpoint, Idaho-based specialty women's apparel, jewelry, and accessories retailer Coldwater Creek Inc. ("Coldwater Creek"), which filed for chapter 11 protection in the District of Delaware on April 11, 2014, with $346 million in assets, seeking to liquidate its business. After a July 2014 auction of Coldwater Creek's remaining leases, the bankruptcy court confirmed a liquidating chapter 11 plan for the company on September 17, 2014.

Privately held 800-restaurant pizza chain Sbarro LLC ("Sbarro"), which filed for chapter 11 protection for the second time in less than three years on March 10, 2014, in the Southern District of New York, listing $100 million to $500 million in assets and debt. Melville, New York-based Sbarro has struggled in recent years as customer traffic slowed in the shopping-mall food courts where many of its stores do business. Sbarro emerged from bankruptcy on June 2, 2014, after obtaining confirmation of a chapter 11 plan under which lenders swapped $148 million in debt for control of the reorganized company.

Legislative/Regulatory Developments

Global—On August 29, 2014, the International Capital Market Association ("ICMA"), a group of banks and investors, announced a proposal designed to reduce the ability of holdout bondholders to undermine sovereign debt restructurings. The plan was created after meetings convened by the U.S. Treasury Department in the aftermath of Greece's debt restructuring and came on the heels of Argentina's second default on its sovereign debt in 13 years. Under ICMA's proposal, "pari passu," or equal treatment, clauses would be interpreted to bind all bondholders to the terms of any debt restructuring agreement approved by at least 75 percent of the bondholders.

Global—On September 9, 2014, the United Nations General Assembly passed a resolution to begin an "intergovernmental negotiation process aimed at increasing the efficiency, stability and predictability of the international financial system." That process would include negotiations toward the implementation of a global bankruptcy process for sovereign debtors. The resolution passed by a super-majority vote of 124-11 with 41 abstentions. The U.S. voted no, along with 10 other countries. Such a bankruptcy process could make it more difficult for holdout bondholders to prevent countries from successfully restructuring their debts and could limit future defaults.

Global—On September 26, 2014, the United Nations Human Rights Council passed a resolution (A/HRC/27/L.26) condemning "vulture funds," like holdout bondholders from Argentina's 2005 and 2010 debt restructurings, "for the direct negative effect that the debt repayment to those funds, under predatory conditions, has on the capacity of Governments to fulfill their human rights obligations, particularly economic, social and cultural rights and the right to development." The resolution, which was proposed by Argentina, Brazil, Russia, Venezuela, and Algeria, passed in the 47-member council with 33 votes in favor. Nine member states abstained, and five—the Czech Republic, Great Britain, Germany, Japan, and the U.S.—opposed the text.

Global—On October 6, 2014, the International Monetary Fund ("IMF") released a series of new proposals entitled "Strengthening the Contractual Framework to Address Collective Action Problems in Sovereign Debt Restructuring." The proposals include reforms to sovereign debt agreements, including strengthened collective action clauses and modification of pari passu clauses akin to the provision relied on by holdout bondholders in Argentina's long-running sovereign debt dispute. Such reforms would not apply to existing sovereign bonds. The IMF proposals state that there may be a need for action on existing bonds as well if the precedent set in the Argentina litigation begins to impact other countries.

United States—The ABI Commission to Study the Reform of Chapter 11 issued its report on December 8, 2014. A brief summary of the long-awaited Final Report and Recommendations of the Commission, established in 2012 by the American Bankruptcy Institute to study the reform of chapter 11 of the Bankruptcy Code, can be found elsewhere in this issue of the Business Restructuring Review.

United States—Puerto Rico—On June 28, 2014, Puerto Rican governor Alejandro García Padilla gave his imprimatur to legislation that creates a judicial debt relief process for certain public corporations that have substantial and widely held bond debt. The new law, which has been challenged by Puerto Rico's creditors as being unconstitutional, is modeled on chapters 9 and 11 of the U.S. Bankruptcy Code (with certain important distinctions) and is in all practical respects a nonfederal bankruptcy law.

United States—The U.S. Judicial Conference proposed Bankruptcy Rule and Official Form changes during 2014. The Judicial Conference Advisory Committees on Appellate, Bankruptcy, Civil, and Criminal Rules proposed amendments to their respective rules and forms and requested that the proposals be circulated to the bench, bar, and public for comment. The public comment period closes on Tuesday, February 17, 2015, at 11:59 p.m.

United States—On July 16, 2014, the Uniform Law Commission approved the Uniform Voidable Transactions Act ("UVTA") to replace the Uniform Fraudulent Transfer Act ("UFTA"). The Commission approved a series of amendments to the UFTA, which is currently in force in 43 states (all states except Alaska, Kentucky, Louisiana, Maryland, New York, South Carolina, and Virginia). The UVTA is intended to: (i) address judicial inconsistency in applying the law, especially in litigation to avoid "constructively" fraudulent transfers; (ii) better harmonize with the Bankruptcy Code and the Uniform Commercial Code; and (iii) provide litigants with greater certainty in its application.

United States—Several bills were introduced in Congress during 2014 that would amend various provisions of the Bankruptcy Code and related statutes:

The "Medical Bankruptcy Fairness Act of 2014" (S. 2471) would amend the Bankruptcy Code to permit a "medically distressed debtor" to discharge student loan debt without the current requirement of filing an adversary proceeding to prove "undue hardship." It would also amend the Bankruptcy Code to, among other things, permit a medically distressed debtor to exempt certain real and personal property valued at up to $250,000 from the bankruptcy estate, to exempt a medically distressed debtor from certain eligibility and plan rejection requirements in chapter 7 and chapter 13 cases, and to waive the credit-counseling filing prerequisite for medically distressed debtors.

The ‘‘Stopping Abusive Student Loan Collection Practices in Bankruptcy Act of 2014'' (H.R. 4835) would amend section 523(d) of the Bankruptcy Code to permit an award of costs incurred by a debtor in connection with a proceeding commenced by a creditor or the debtor to determine the dischargeability of a student loan debt based on undue hardship, if the court ultimately determines that the debt is dischargeable.

The "Student Loan Borrower Bill of Rights" (H.R. 3892) would provide "six basic rights" for all federal and private student loan borrowers, including the right to: (i) have options such as alternative payment plans to avoid default; (ii) be informed about key terms and conditions of the loan and any repayment options; (iii) know the identity of the loan servicer; (iv) consistency when it comes to how monthly payments are applied; (v) fairness, such as grace periods when loans are transferred or debt cancellation when the borrower dies or becomes disabled; and (vi) accountability, including timely resolution of errors and certification of private loans. The bill also proposes new regulations for servicing private student loans.

The "Bankruptcy Fairness and Employee Benefits Protection Act of 2014" (S. 2418) would amend the Bankruptcy Code and the Employee Retirement Income Security Act of 1974 to, among other things: (i) limit any reduction in bankruptcy of the compensation and benefits of employees and retirees; (ii) increase the amount of unpaid wages that receive priority treatment; (iii) limit payments and bonuses to insiders; (iv) force employers to continue funding pension plans after filing for bankruptcy; (v) require employers to provide employees with more extensive guidance as to the vesting rights of their health-care benefits; and (vi) create a presumption that employee health benefits fully vest at the earlier of retirement or the completion of 20 years with an employer.

The "Furthering Asbestos Claim Transparency Act of 2014" (S. 2319) would require asbestos trusts to publicly disclose information about the settlement terms between trusts and claimants. Under current state and federal rules, the terms of and negotiations surrounding settlements of cases are treated as private and strictly confidential information that is not subject to discovery or admissible in court cases.

The "Financial Institution Bankruptcy Act of 2014" ("FIBA") (H.R. 5421) would amend the Bankruptcy Code to establish procedures to resolve (wind up or liquidate) systemically important financial institutions ("SIFIs"). FIBA is similar in many respects to the bankruptcy amendments proposed in the "Taxpayer Protection and Responsible Resolution Act of 2014" (S. 1861), which would repeal portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") and replace that resolution framework with a new chapter 14 of the Bankruptcy Code to govern SIFI resolutions. The Senate proposal would entirely repeal the Orderly Liquidation Authority (the "OLA"), the current regulatory receivership alternative to traditional bankruptcy for resolving failed SIFIs. FIBA would keep the OLA in place as an alternative. Separately, the Federal Deposit Insurance Corporation (the "FDIC"), which was given broad authority under Dodd-Frank to develop rules regarding its authority under the OLA, has proposed a "single point of entry" process whereby the FDIC would become the receiver of a SIFI's top-level U.S. holding company, leaving the operating subsidiaries to continue operations without interruption. The FDIC would then work to ensure that the holding company can absorb the organization's losses, including those incurred by subsidiaries, and thereby recapitalize the subsidiaries. The FDIC would also be able to take control of the holding company and transfer its assets to a newly created, solvent "bridge bank."

United States—Amendments to the Federal Rules of Bankruptcy Procedure that were approved by the U.S. Supreme Court in April 2014 became effective on December 1, 2014. The changes, particularly the comprehensive revision to the rules governing bankruptcy appeals, were the result of a "multi-year project to bring the bankruptcy appellate rules into closer alignment with the Federal Rules of Appellate Procedure; to incorporate a presumption favoring the electronic transmission, filing, and service of court documents; and to adopt a clearer style," according to the Judicial Conference Advisory Committee on Bankruptcy Rules.

France—French insolvency proceedings will be significantly overhauled in the near term, as reforms are currently being implemented under the Enabling Law of January 2, 2014. The reforms are designed to strengthen the efficacy of preventive measures and procedures in order to avoid the need for formal public insolvency proceedings. Various new provisions are being contemplated, including: (i) procedures making it possible to implement a business plan providing for the sale of a company in a conciliation agreement; and (ii) amendments to the rules governing accelerated financial safeguard procedures to make such procedures more accessible. In addition, the reforms may include a provision authorizing a "cram-down" of equity interests in French reorganization proceedings akin to procedures governing the confirmation of nonconsensual chapter 11 plans in the U.S.

Spain—March 8, 2014, was the effective date of significant changes to the Spanish Insolvency Act that implement reforms to the rules and procedures governing the refinancing and restructuring of corporate debts. The primary objective of Spanish Royal Decree-Law 4/2014, dated March 7, 2014, is to improve the legal framework for refinancing agreements and to remove the legal obstacles that have previously impeded the successful execution of restructuring and refinancing transactions.

Spain—On September 5, 2014, Spain enacted measures ("RDL 11/2014") to facilitate restructurings of companies that, under the previous legislative regime, might have been forced to file insolvency proceedings. RDL 11/2014 modifies several provisions of the Spanish Insolvency Act. The objective of the reform is to improve the legal framework that governs voluntary arrangements between creditors and the sale of distressed businesses outside insolvency by removing obstacles which have previously impeded the successful reorganization of insolvent companies. In addition, RDL 11/2014 establishes rules to deal with the ongoing insolvency proceedings of certain concession holders for Spain's toll highways, with the aim of preventing such concession holders from being placed into liquidation.

Chile—A new insolvency law approved by the Chilean Congress at the end of 2013 became effective in October 2014. The legislation substantially overhauls Chile's prior insolvency law, particularly with respect to business insolvency cases. It incorporates a number of provisions that permit the reorganization of financially troubled businesses, with a view toward preserving enterprise value and jobs, as well as expediting and enhancing creditor recoveries. The new law represents a marked departure from the previous regime, which was focused on the liquidation of debtors' assets.

The Netherlands—In August 2014, the Dutch legislature circulated a proposed bill that would introduce to Dutch restructuring law U.K.-style "schemes of arrangement," a radical departure from existing procedures. The proposed bill follows the introduction of a prepackaged insolvency mechanism in 2013. Under existing Dutch law, it is nearly impossible to alter the capital structure of a company without the unanimous approval of all debt and equity holders. The draft bill, which is expected to be implemented (as amended) on January 1, 2016, introduces rules that would, among other things, bind dissenting creditors to a restructuring proposal under certain circumstances.

Russia—On December 23, 2014, Russian President Vladimir V. Putin signed into law amendments to the country's bankruptcy and banking legislation that would change the rules and procedures governing banking business insolvencies. Federal Law No. 432-FZ annulled legislation enacted in 1999 and incorporated certain provisions of a 2002 law on bankruptcy. The new legislation allows Russia's Deposit Insurance Agency to implement measures designed to prevent bank insolvencies and to promote financial rehabilitation, temporary administration, and reorganization proceedings. It also limits legal actions contesting pre-insolvency payments made by banks and clients under loan agreements. In addition, the law permits legal action to contest decisions to increase compensation and pay bonuses to top executives of insolvent banks; it also contains provisions to govern the insolvency proceedings of banks that take part in interbank clearing systems.

Notable Business Bankruptcy Decisions of 2014

Allowance/Disallowance/Priority/Discharge of Claims

Section 510(b) of the Bankruptcy Code provides a mechanism designed to preserve the creditor/shareholder risk allocation paradigm by categorically subordinating most types of claims asserted against a debtor by equity holders in respect of their equity holdings. However, courts do not always agree on the scope of this provision in undertaking to implement its underlying policy objectives. In In re Lehman Brothers Inc., 503 B.R. 778 (Bankr. S.D.N.Y. 2014), the bankruptcy court concluded that the provision is unambiguous, ruling that claims asserted against a debtor arising from securities issued by the debtor's corporate parent are subject to subordination under section 510(b).

However, in In re Lehman Brothers Holdings Inc., 513 B.R. 624 (Bankr. S.D.N.Y. 2014), the court held that securities fraud claims relating to certain collateralized mortgage-backed securities ("MBS") marketed by the debtors could not be subordinated under section 510(b) because the MBS were not securities "of the debtor or of an affiliate of the debtor." Confronting an issue of first impression, the bankruptcy court wrote that "the court has endeavored here to retrofit a square peg, mortgage-backed securities, into a round hole, Section 510(b)." It ruled that "either under a plain reading of the statute or resorting to the stated purpose for enacting section 510(b) set forth in its legislative history, the MBS are not securities ‘of the debtor or of an affiliate of the debtor' under Section 510(b) of the Bankruptcy Code."

Prepayment, or "make-whole," premiums have recently been a source of controversy in bankruptcy and appellate courts. In In re Denver Merchandise Mart, Inc., 740 F.3d 1052 (5th Cir. 2014), the Fifth Circuit ruled that a lender was not entitled to a make-whole premium because "[t]he plain language of the contract [did] not require the payment of the Prepayment Consideration in the event of mere acceleration." According to the court, in the absence of clear contractual language stating otherwise, a lender's voluntary decision to accelerate a loan generally acts as a waiver of any right to a make-whole premium.

In In re MPM Silicones, LLC, 2014 BL 250360 (Bankr. S.D.N.Y. Sept. 9, 2014) (memorializing bench ruling of Aug. 26, 2014), the court ruled that a default on prepetition notes triggered by a bankruptcy filing and automatic acceleration did not equate to prepayment of the notes and therefore, by the express terms of the indentures, the noteholders were not entitled to make-whole premiums. According to the court, although the parties could have contracted around this problem with clear and unambiguous language providing for the payment of a make-whole premium, even in the event of automatic acceleration due to a bankruptcy filing, such clear and unambiguous language was absent from the indentures. The court also denied the noteholders' request to rescind the acceleration and thereby "resurrect the make-whole claim," ruling that the automatic stay precluded deceleration.

In Davis v. Elliot Mgmt. Corp. (In re Lehman Bros. Holdings, Inc.), 508 B.R. 283 (S.D.N.Y. 2014), vacating In re Lehman Brothers Holdings Inc., 487 B.R. 181 (Bankr. S.D.N.Y. 2013), the district court vacated a bankruptcy court ruling that, despite the lack of explicit authority in section 503(b) of the Bankruptcy Code to pay the fees and expenses of individual official committee members as administrative expenses, such authority is provided by: (i) section 1123(b)(6), which provides that a chapter 11 plan may include any provision "not inconsistent" with applicable provisions of the Bankruptcy Code; and (ii) section 1129(a)(4), which provides that a court shall confirm a plan only if payments made under the plan for services or for costs and expenses in connection with a chapter 11 case are "reasonable."

According to the district court, "§ 503(b)(3) and (4) glaringly exclude professional fee expenses for official committee members." Moreover, the court ruled that the requirements of section 503(b) may not be circumvented by characterizing the payment of such fees as "permissive plan payments" authorized under sections 1123(b)(6) and 1129(a)(4). The court wrote that "neither the need for flexibility in bankruptcy cases, the consensual nature of [the plan provision] nor a bankruptcy court's approval of a payment as ‘reasonable' can justify a plan provision that is merely a backdoor to administrative expenses that § 503 has clearly excluded."

In White v. Jacobs (In re New Century TRS Holdings, Inc.), 2014 BL 230334 (D. Del. Aug. 20, 2014), the Delaware district court vacated a bankruptcy court order approving the constitutional sufficiency of notice of the proof-of-claim filing deadline, or "bar date," to unknown creditors by publication in The Wall Street Journal and the Orange County Register. In so ruling, the district court concluded that: (i) notice in those publications was not reasonably calculated to apprise "less than sophisticated, focused readers" of the bar date; and (ii) 39 days' notice was inadequate under the circumstances.

In In re Franklin Bank Corp., 2014 BL 200948 (D. Del. July 21, 2014), a Delaware district court confronted the apparent conflict between the priorities established by section 726(a) of the Bankruptcy Code for late-filed claims and a prepetition subordination agreement, the terms of which are ordinarily enforced in bankruptcy pursuant to section 510(a). The court vacated and remanded a bankruptcy court ruling that: (i) by filing its claims years after the claims bar date, a creditor waived its right to enforce the terms of prepetition subordination agreements; or, in the alternative, (ii) the late filings justified equitable subordination of the tardy creditor's claims. According to the district court, the creditor's failure to act in a timely manner did not rise to the level of a "clear manifestation of intent to relinquish a contractual protection," and there was evidence of neither inequitable conduct nor harm to other creditors that would warrant equitable subordination of the late-filed claims.

Automatic Stay

Addressing what some would consider an inviolate bankruptcy right—a debtor's right to the protections of the automatic stay under section 362 of the Bankruptcy Code—the bankruptcy court in In re Triple A&R Capital Investment, Inc., 2014 BL 283893 (Bankr. D.P.R. Oct. 9, 2014), ruled that a secured lender was entitled to relief from the stay because the debtor, in a court-approved cash collateral stipulation, generally ratified prepetition forbearance agreements between the parties that included a stay waiver provision. Notably, the court did not address the absence of language in the cash collateral stipulation unequivocally manifesting the debtor's knowing and specific waiver of the stay.

Avoidance Actions/Trustee's Avoidance and Strong-Arm Powers

Not every payment made by a debtor on the eve of bankruptcy can be avoided merely because it appears to be preferential. Section 547 of the Bankruptcy Code provides several statutory defenses to preference liability. The Eighth Circuit addressed one such defense to preference avoidance—the "subsequent new value" exception—in Stoebner v. San Diego Gas & Electric Co. (In re LGI Energy Solutions, Inc.), 746 F.3d 350 (8th Cir. 2014). In a matter of first impression, the court ruled that "new value" (either contemporaneous or subsequent) for purposes of section 547(c) can be provided by an entity other than the transferee.

An important defense in fraudulent transfer avoidance litigation is that the recipient provided value in exchange for the transfer and acted in "good faith." Because the Bankruptcy Code does not define "good faith," courts assessing the viability of a good-faith defense typically examine whether, on the basis of the specific circumstances, a transferee knew or should have known that a transfer was actually or constructively fraudulent. Although most courts agree that this test is an objective one, the Fourth Circuit's ruling in Gold v. First Tenn. Bank N.A. (In re Taneja), 743 F.3d 423 (4th Cir. 2014), may have introduced an element of subjectivity into the analysis. The court held in a split decision that: (i) the same standard applies in assessing good faith under sections 548(c) and 550(b) of the Bankruptcy Code (both of which protect good-faith transferees who provide "value" in exchange for a transfer or obligation); and (ii) a transferee bank met its burden of demonstrating good faith without introducing evidence of standard practices in the mortgage warehousing industry.

In Williams v. Federal Deposit Insurance Corp. (In re Positive Health Management), 769 F.3d 899 (5th Cir. 2014), the Fifth Circuit ruled that a "good faith transferee" in fraudulent transfer litigation "is entitled" to keep what it received "only to the extent" it gave "value." The court reversed lower court rulings in part, narrowing their conclusion that the debtor had "received reasonably equivalent value in exchange for the debtor's cash transfers." In so ruling, the court of appeals disregarded the value of indirect economic benefits that had been relied upon by a good-faith lender as an affirmative defense to the trustee's fraudulent transfer claim. Significantly, the Fifth Circuit rejected the reasoning of other lower courts which have ruled that the term "value" in section 548(c) means "reasonably equivalent value." According to the Fifth Circuit, the two terms have "distinct meanings" and "[i]t is unlikely that the drafters of the Bankruptcy Code intended ‘value' under section 548(c) to mean ‘reasonably equivalent value' when the latter term is explicitly used in another subsection of the same statute (section 548(a)'s provision for constructive fraudulent transfers)."

The meaning of "unreasonably small capital" in the context of constructively fraudulent transfer avoidance litigation is not spelled out in the Bankruptcy Code. As a result, bankruptcy courts have been called upon to fashion their own definitions of the term. Nonetheless, the courts that have considered the issue have mostly settled on some general concepts in fashioning such a definition. In Whyte ex rel. SemGroup Litig. Trust v. Ritchie SG Holdings, LLC (In re SemCrude, LP), 2014 BL 272343 (D. Del. Sept. 30, 2014), a Delaware district court reaffirmed two such guiding principles: (i) a debtor can have unreasonably small capital even if it is solvent; and (ii) a "reasonable foreseeability" standard should be applied in assessing whether capitalization is adequate.

Bankruptcy Asset Sales

In In re Fisker Automotive Holdings, Inc., 510 B.R. 55 (Bankr. D. Del.), leave to app. denied, 2014 BL 33749 (D. Del. Feb. 7, 2014), certification denied, 2014 BL 37766 (D. Del. Feb. 12, 2014), a Delaware bankruptcy court limited a creditor's ability to credit bid its debt in connection with the sale of the debtor's assets. Although the court limited the amount of the credit bid to the distressed purchase price actually paid for the debt, the court focused on the prospect that the credit bid would chill bidding and the fact that the full scope of the underlying lien was as yet undetermined. The court also expressed concern as to the expedited nature of the sale, which in the court's view was never satisfactorily explained.

In In re The Free Lance-Star Publishing Co. of Fredericksburg, Va., 512 B.R. 798 (Bankr. E.D. Va.), leave to app. denied, 512 B.R. 808 (E.D. Va. 2014), the court found "cause" under section 363(k) to limit a credit bid by an entity that purchased $39 million in face amount of debt with the intention of acquiring ownership of the debtors. The court limited the credit bid in connection with a sale of the debtors' assets under section 363(b) on the basis of its findings that: (i) the creditor's liens on a portion of the assets to be sold had been improperly perfected; (ii) the creditor engaged in inequitable conduct by forcing the debtor into bankruptcy and an expedited section 363 sale process in pursuing its clearly identified "loan-to-own" strategy; and (iii) the creditor actively "frustrate[d] the competitive bidding process" and attempted "to depress the sales price of the Debtors' assets." The court accordingly limited the debt purchaser's credit bid to $14 million, the approximate value of the collateral that was subject to the creditor's valid and perfected liens.

In In re Charles Street African Methodist Episcopal Church of Boston, 510 B.R. 453 (Bankr. D. Mass. 2014), the court denied in part a chapter 11 debtor's motion to limit a credit bid on the basis that the secured creditor's claims were subject to bona fide dispute because the debtor had filed counterclaims against the creditor which, by way of setoff, could have reduced the amount of the claims to zero. In finding that "cause" to limit the credit bid was lacking under section 363(k), the court explained that: (i) despite the debtor's counterclaims, which did not relate to the validity of the secured creditor's claims or liens, the creditor's claims were "allowed" (a designation that the debtor did not dispute); and (ii) the claims were not likely to be exhausted entirely in a credit bid for the assets. The court rejected the debtor's argument that "credit risk" associated with collecting on its counterclaims was a valid reason under the circumstances to limit credit-bidding rights. According to the court, "[The debtor] would be using a denial of credit bidding as, in essence, a form of prejudgment security, a purpose that I doubt it was intended to serve."

In In re New Energy Corp., 739 F.3d 1077 (7th Cir. 2014), the Seventh Circuit ruled that a potential purchaser who considered buying, but ultimately did not bid on, a chapter 11 debtor's assets, lacked standing to argue that the proposed sale was tainted by collusive bidding in violation of section 363(n) of the Bankruptcy Code. Among other things, that section authorizes a bankruptcy trustee to avoid collusive bankruptcy asset sales. The court reasoned that the potential bidder lacked standing to object to the sale because it did not ultimately bid on the debtor's assets, it was not a creditor, and it was not harmed or impaired by the proposed sale. According to the court, the would-be bidder was more akin to a "public-inspired observer."

Courts disagree as to whether the rights of a nondebtor lessee under section 365(h)(1) of the Bankruptcy Code to remain in possession upon rejection of the lease are effectively extinguished if the leased real property is sold free and clear of any "interest" under section 363(f). For example, in In re Spanish Peaks Holdings II, LLC, 2014 BL 64226 (Bankr. D. Mont. Mar. 10, 2014), the court concluded that a case-by-case, fact-intensive, totality-of-the-circumstances approach, rather than a bright-line rule, governs whether section 363(f) or section 365(h) should prevail in any given situation. It ruled that, under the circumstances before it—involving well under-market leases between insiders without any effort by the lessees to protect themselves by seeking a nondisturbance agreement or by establishing a case for adequate protection—the free and clear sale eliminated the lessees' section 365(h) rights.

In Dishi & Sons v. Bay Condos LLC, 510 B.R. 696 (S.D.N.Y. 2014), the bankruptcy court had adopted the majority rule, holding that the lessee's rights under section 365(h) trump the right to sell the leased property free and clear under section 363(f). Alternatively, the bankruptcy court held that even if section 363(f) permits such a sale, the lessee is entitled to continued possession as "adequate protection" of its interest under section 363(e).

On appeal, the district court reached the same result but declined to endorse the majority interpretation. It ruled that section 365(h) does not give the nondebtor lessee absolute rights which take precedence over the trustee's right to sell free and clear of interests. Rather, the court wrote that "[section 365(h)] clarifies that the lessee may retain its appurtenant rights notwithstanding the trustee's rejection of the lease" and "[s]ection 363(f), in turn, authorizes the trustee to extinguish the lessee's appurtenant rights—like any other interest in property—but only if one of five conditions [in section 363(f)] is satisfied with respect thereto." The district court concluded that the bankruptcy court did not abuse its discretion in holding that the lessee was entitled to continued possession as adequate protection of its interest.

Bankruptcy Court Powers and Jurisdiction

The U.S. Supreme Court's 2011 ruling in Stern v. Marshall, 132 S. Ct. 56 (2011), continues to complicate the day-to-day operation of bankruptcy courts scrambling to deal with a deluge of challenges—strategic or otherwise—to the scope of their "core" authority to issue final orders and judgments on a wide range of disputes. In Stern, the court ruled that, to the extent that 28 U.S.C. § 157(b)(2)(C) purports to confer authority on a bankruptcy court to finally adjudicate a bankruptcy estate's state law counterclaim against a creditor who filed a proof of claim, the provision is constitutionally invalid.

In Executive Benefits Insurance Agency v. Arkison, 134 S. Ct. 2165 (2014), the Supreme Court attempted to address certain questions it had left unanswered in Stern concerning a bankruptcy judge's jurisdictional authority. A unanimous court held that, when a bankruptcy court is confronted with a claim which is statutorily denominated as "core" but is not constitutionally determinable by a bankruptcy judge under Article III of the U.S. Constitution, the bankruptcy judge should treat such a claim as a non-core "related to" matter that the district court reviews anew. The ruling eliminates any supposed "statutory gap" created by Stern, but it leaves many potentially larger jurisdictional and constitutional questions unanswered.

"Structured dismissal" of a chapter 11 case following a sale of substantially all of the debtor's assets has become increasingly common as a way to minimize cost and maximize creditor recoveries. However, only a handful of rulings have been issued on the subject, perhaps because bankruptcy courts are unclear as to whether the Bankruptcy Code authorizes the remedy. A Texas bankruptcy court added to this slim body of jurisprudence in In re Buffet Partners, L.P., 2014 BL 207602 (Bankr. N.D. Tex. July 28, 2014). The court ruled that sections 105(a) and 1112(b) of the Bankruptcy Code provide authority for such a structured dismissal, noting that the remedy "is clearly within the sphere of authority Congress intended to grant to bankruptcy courts in the context of dismissing chapter 11 cases." The court in In re Biolitec, Inc., 2014 BL 355529 (Bankr. D.N.J. Dec. 16, 2014), ruled to the contrary, denying a motion for approval of a structured dismissal due to concerns regarding a court's authority to grant such relief and the absence of certain protections otherwise provided in connection with dismissal or conversion of a case or confirmation of a chapter 11 plan.

Chapter 11 Plans

In In re MPM Silicones, LLC, 2014 BL 250360, 43 (Bankr. S.D.N.Y. Sept. 9, 2014) (memorializing bench ruling of Aug. 26, 2014), the bankruptcy court held that, based in part on the U.S. Supreme Court's plurality opinion in Till v. SCS Credit Corp., 541 U.S. 465 (2004), the chapter 11 cram-down rules set forth in section 1129(b)(2) of the Bankruptcy Code are satisfied by a plan which provides a secured creditor with a replacement note bearing interest at a risk-free base rate plus a risk premium that reflects the repayment risk associated with the debtors (but excluding any profits, costs, or fees). The court discounted the argument that a market rate of interest should be applied to the replacement notes, noting that the Supreme Court had expressly rejected such an approach in Till. Moreover, the bankruptcy court was critical of courts that have read Till to endorse a market-rate approach in chapter 11 cases, where, unlike in Till (a chapter 13 case), an efficient debtor-in-possession ("DIP") financing market exists. The MPM Silicones court emphasized that voluntary DIP loans and cram-down loans forced on unwilling creditors are completely different.

In determining whether nondebtor, third-party releases may be included in a chapter 11 plan, many courts examine the six factors enumerated in Class Five Nevada Claimants v. Dow Corning Corp. (In re Dow Corning Corp.), 280 F.3d 648 (6th Cir. 2002). These factors are: (1) there is an identity of interests between the debtor and the third party; (2) the nondebtor has contributed substantial assets to the reorganization; (3) the release is essential to reorganization; (4) impacted classes have overwhelmingly voted to accept the plan; (5) the plan provides a mechanism to pay all, or substantially all, of the claims in the class or classes affected by the release; and (6) the plan provides an opportunity for those claimants who choose not to accept the releases to recover in full.

In In re National Heritage Foundation, Inc., 2014 BL 180181 (4th Cir. June 27, 2014), the Fourth Circuit ruled that a bankruptcy court did not err in concluding that third-party plan releases were unenforceable if they covered, among others, the debtor; the creditors' committee; committee members; and any officers, directors, or employees of the debtor. According to the Fourth Circuit, the debtor failed to demonstrate that the facts and circumstances warranted third-party relief, which should be "cautious and infrequent." Of the six Dow Corning factors, the bankruptcy court found that only one applied—an identity of interests between the debtor and the related parties.

In In re Genco Shipping & Trading Ltd., 513 B.R. 233 (Bankr. S.D.N.Y. 2014), the bankruptcy court emphasized that nondebtor releases and exculpations "are permissible under some circumstances, but not as a routine matter" and that such releases are "proper only in rare cases." In accordance with the Second Circuit's ruling in Deutsche Bank AG v. Metromedia Fiber Network, Inc. (In re Metromedia Fiber Network, Inc.), 416 F.3d 136 (2d Cir. 2005), the Genco court explained, such provisions are permissible where: (i) they are important features of a chapter 11 plan; (ii) claims are "channeled" to a settlement fund, rather than extinguished; (iii) enjoined claims would indirectly impact the reorganization by way of indemnity or contribution; (iv) the released party provides substantial consideration; (v) the plan otherwise provides for full payment of released claims; or (vi) creditors consent. The Genco court approved third-party releases and exculpations in a chapter 11 plan by creditors who consented to the provisions and for third parties who provided substantial consideration to the reorganization.

In In re Lower Bucks Hosp., 2014 BL 186680 (3d Cir. July 3, 2014), the bankruptcy court had denied approval of a chapter 11 plan release provision that would have prohibited a class of bondholders from suing their trustee. The Third Circuit affirmed. Explaining that it had previously identified the "hallmarks" of permissible nonconsensual third-party releases as "fairness, necessity to the reorganization, and specific factual findings to support these conclusions," the court of appeals ruled that, because the release provision was not adequately disclosed in the disclosure statement to the creditors who would have been affected by it, "we cannot conclude that the Release was exchanged for adequate consideration or was otherwise fair to the Bondholders."

After a creditor or equity security holder casts its vote to accept or reject a chapter 11 plan, the vote can be changed or withdrawn "[f]or cause shown" in accordance with Rule 3018(a) of the Federal Rules of Bankruptcy Procedure. However, "cause" is not defined in Rule 3018(a), and relatively few courts have addressed the meaning of the term in this context in reported decisions. In In re MPM Silicones, LLC, 2014 BL 258176 (Bankr. S.D.N.Y. Sept. 17, 2014), the court denied a motion filed by secured noteholders to change their votes that had been cast against the debtors' chapter 11 plan. The court found that there was not sufficient "cause" to authorize the change in votes because it was "crystal clear that the requested vote change [was] not, in effect, a consensual settlement" and "[was] seeking to undo a choice that had originally been made" by sophisticated creditors after due deliberation.

Creditor Rights

In BOKF, N.A. v. JPMorgan Chase Bank, N.A. (In re MPM Silicones, LLC), 518 B.R. 740 (Bankr. S.D.N.Y. 2014), the court dismissed a lawsuit by senior-lien creditors alleging that junior-lien creditors had breached an intercreditor agreement (the "ICA") on shared collateral by taking and supporting certain actions adverse to the senior-lien creditors. The debtors' chapter 11 plan provided that new equity would be distributed to junior-lien creditors, while senior-lien creditors would receive new debt secured by the same collateral. Because the seniors objected to the proposed treatment, the debtors sought a cram-down confirmation. The juniors supported the plan and objected to the payment of a make-whole premium to the seniors. The seniors sued the juniors for breaching the ICA by taking positions that were adverse to the seniors. Among other things, the court dismissed with prejudice the claim that the juniors' opposition to the make-whole premium, as well as support for a cram-down plan, constituted taking action adverse to the senior-lien creditors in contravention of the ICA.

In In re Coastal Broadcasting Sys., Inc., 570 Fed. App'x 188, 2014 BL 174597 (3d Cir. June 23, 2014), the Third Circuit affirmed lower court rulings confirming a chapter 11 plan that had been approved, in part, with votes cast by a senior creditor on behalf of a junior creditor. The two creditors were party to a prepetition subordination and intercreditor agreement that provided for, among other things, assignment to the senior creditor of the subordinated creditor's right to vote on a chapter 11 plan. Like the bankruptcy and district courts, the Third Circuit found that the subordination agreement "plainly allow[ed]" the senior creditor to vote the subordinated creditor's debt in a chapter 11 liquidation or reorganization. "To argue otherwise," the court wrote, "is a word warp of clear contract language."

In In re Bay Club Partners-472, LLC, 2014 BL 125871 (Bankr. D. Or. May 6, 2014), the court held that a creditor possessed standing to seek dismissal of a chapter 11 case on the basis that the debtor—a limited liability company established as a special purpose entity—was not properly authorized to file for bankruptcy. The court went on to rule, however, that a restrictive covenant added at the creditor's insistence to the debtor's operating agreement prohibiting a bankruptcy filing was unenforceable and that the debtor accordingly was duly authorized to file for chapter 11 protection.

In In re Optim Energy, LLC, 2014 BL 132735 (Bankr. D. Del. May 13, 2014), the court denied a creditor's motion for "derivative standing" to assert recharacterization, equitable subordination, and breach-of-fiduciary-duty claims against claimants that were senior secured lenders to, and holders of equity in, the debtors. In assessing whether the underlying claims were colorable, the court declined to apply the prevailing multifactor test to determine whether recharacterization of debt as equity is appropriate. Instead, the court relied on recent Third Circuit precedent in adopting an intent-based approach.

Cross-Border Bankruptcy Cases

The Second Circuit held as a matter of first impression in Drawbridge Special Opportunities Fund LP v. Barnet (In re Barnet), 737 F.3d 238 (2d Cir. 2013), that section 109(a) of the Bankruptcy Code, which requires a debtor "under this title" to have a domicile, a place of business, or property in the U.S., applies in cases under chapter 15 of the Bankruptcy Code. The Second Circuit accordingly vacated and remanded a bankruptcy court order granting recognition under chapter 15 to a debtor's Australian liquidation proceeding, concluding that the bankruptcy court erred in ruling that section 109(a) does not apply in chapter 15 cases and that it improperly recognized the debtor's Australian liquidation proceeding in the absence of any evidence that the debtor had a domicile, a place of business, or property in the U.S.

On remand, the bankruptcy court ruled in In re Octaviar Administration Pty Ltd., 511 B.R. 361 (Bankr. S.D.N.Y. 2014), that the requirement of property in the U.S. should be interpreted broadly. Because the Australian debtor had causes of action governed under U.S. law against parties in the U.S. and also had an undrawn retainer maintained in the U.S., the court concluded that the debtor satisfied chapter 15's U.S. property requirement.

In In re Suntech Power Holdings Co., Ltd., 2014 BL 322350 (Bankr. S.D.N.Y. Nov. 17, 2014), the bankruptcy court cited Octaviar in holding that even a quasi-bank account—an account owned by a third party which could be used to receive the foreign debtor's funds—was sufficient to create "property of the debtor" in the U.S. and thus qualify the debtor for chapter 15 eligibility.

In In re Fairfield Sentry Limited, 484 B.R. 615 (Bankr. S.D.N.Y. 2013), the bankruptcy court ruled that it was not required to review a proposed sale of claims by a chapter 15 debtor brought against a debtor in a U.S. proceeding under the Securities Investor Protection Act ("SIPA") because: (i) the sale did not involve property "within the territorial jurisdiction of the United States," such that it would be subject to review under section 363 of the Bankruptcy Code (in accordance with the rule for chapter 15 cases established by section 1520(a)(2)); and (ii) comity dictated deference to a foreign court's judgment approving the sale. The district court affirmed on appeal, holding that "[i]t is not clear that Section 363 . . . applies," but that, even if it did, the bankruptcy court's denial of the motion challenging the sale was proper because "[c]ourts should be loath to interfere with corporate decisions absent a showing of bad faith, self-interest, or gross negligence." See Krys v. Farnum Place, LLC (In re Fairfield Sentry Ltd.), 2013 BL 370732 (S.D.N.Y. July 3, 2013).

The Second Circuit reversed those rulings in Krys v. Farnum Place, LLC (In re Fairfield Sentry Ltd.), 768 F.3d 239 (2d Cir. 2014). According to the court of appeals, the sale of the SIPA claims was a "transfer of an interest of the debtor in property that is within the territorial jurisdiction of the United States" and therefore subject to review under sections 363 and 1520(a)(2), because the claim "is subject to attachment or garnishment and may be properly seized by an action in a Federal or State court in the United States." Moreover, the Second Circuit held, the bankruptcy court erred when it gave deference to the foreign court's approval of the sale of the claim because section 1520(a)(2) obligates a U.S. bankruptcy court to review such a sale under section 363. On January 13, 2015, the Second Circuit denied a motion by one of the purchasers of the claims for a rehearing en banc of the appeal.

Executory Contracts and Unexpired Leases

In A&F Enters., Inc. II v. Int'l House of Pancakes Franchising LLC (In re A&F Enters., Inc. II), 742 F.3d 763 (7th Cir. 2014), the Seventh Circuit examined, among other things, a franchisee-lessee's likelihood of success on the merits in considering a motion for a stay pending appeal of an order determining that its franchise agreement expired when a related nonresidential real property lease was deemed rejected pursuant to section 365(d)(4) of the Bankruptcy Code. In granting the stay, the Seventh Circuit wrote that "[t]here are powerful arguments in favor" of the franchisee's argument that the later plan confirmation assumption or rejection deadline stated in section 365(d)(2) for most executor contracts and unexpired leases should apply to the related contracts.

In Lewis Bros. Bakeries, Inc. v. Interstate Brands Corp. (In re Interstate Bakeries Corp.), 751 F.3d 955 (8th Cir. 2014), the Eighth Circuit held that a trademark license agreement was not executory and thus could not be assumed or rejected because the license was part of a larger, integrated agreement which had been substantially performed by the debtor prior to filing for bankruptcy.

In In re Crumbs Bake Shop, Inc., 2014 BL 309030 (Bankr. D.N.J. Oct. 31, 2014), the court ruled that trademark licensees are entitled to the protections of section 365(n), notwithstanding the omission of "trademarks" from the Bankruptcy Code definition of "intellectual property." The court also held that a sale of assets "free and clear" under section 363(f) does not trump or extinguish the rights of a third-party licensee under section 365(n), unless the licensee consents. A detailed discussion of the ruling can be found elsewhere in this issue of the Business Restructuring Review.

Financial Contracts and Setoffs

In Weisfelner v. Fund 1 (In re Lyondell Chem. Co.), 503 B.R. 348 (Bankr. S.D.N.Y. 2014), the bankruptcy court held that the "safe harbor" under section 546(e) of the Bankruptcy Code for settlement payments does not preclude claims brought by a chapter 11 plan litigation trustee under state law to avoid as fraudulent transfers pre-bankruptcy payments to shareholders in a leveraged buyout of the debtor. By its ruling, the court contributed to a split among the courts in the Southern District of New York, aligning itself with the district court in In re Tribune Co. Fraudulent Conveyance Litig., 499 B.R. 310 (S.D.N.Y. 2013), and against the district court in Whyte v. Barclays Bank PLC, 494 B.R. 196 (S.D.N.Y. 2013).

In Grede v. FCStone, LLC, 746 F.3d 244 (7th Cir. 2014), the Seventh Circuit confirmed courts' expansive view of the 546(e) safe harbor when it overruled a district court's "equitable" approach to creditor distributions. The Seventh Circuit held that a trustee could not avoid a prepetition transfer to a favored customer (an investor in one of the debtor's securities investment portfolios) as a constructively fraudulent transfer because the transferred funds came from the debtor's sale of securities. The court reasoned that the distribution to the customer from its investment account, like the payment made by the purchaser to the debtor for securities the proceeds of which were deposited into the account, qualified as a "settlement payment" and was made "in connection with a securities contract."

Litigation and Appellate Issues

In TMT Procurement Corp. v. Vantage Drilling Co. (In re TMT Procurement Corp.), 764 F.3d 512 (5th Cir. 2014), reh'g denied, No. 13-20622 (5th Cir. Oct. 23, 2014), the Fifth Circuit vacated DIP financing orders of the bankruptcy court and district court, notwithstanding express findings by the lower courts that the lender had acted in good faith. Such findings ordinarily would have mooted any appeal in the absence of a stay pending appeal. The Fifth Circuit ruled that: (i) the appeals were not statutorily moot because, having been aware of an adverse claim to stock that was pledged as collateral for the DIP loan, the DIP lender lacked "good faith"; and (ii) the lower courts lacked subject-matter jurisdiction to enter the DIP financing orders.

In Beeman v. BGI Creditors' Liquidating Trust (In re BGI, Inc.), 772 F.3d 102 (2d Cir. 2014), the Second Circuit considered, as a matter of first impression, whether the doctrine of "equitable mootness" applies to appeals impacting plan confirmation orders in both liquidating and reorganizing chapter 11 cases. The court ruled that it does and affirmed a lower court ruling dismissing an appeal because the appellants failed to overcome the presumption of mootness triggered by "substantial consummation" of a liquidating chapter 11 plan. A detailed discussion of the ruling can be found elsewhere in this issue of the Business Restructuring Review.

Municipal Debtors

In In re City of Stockton, California, No. 2:12-bk-32118 (Bankr. E.D. Cal. Oct. 1, 2014), the bankruptcy court ruled that claims asserted by the California Public Employees' Retirement System (CalPERS) for pension obligations could be impaired under a chapter 9 plan of adjustment for Stockton. According to the court, the bankruptcy clause of the U.S. Constitution (U.S. Const. art. I § 8, cl. 4) authorizes Congress to make laws that impair contracts. Therefore, while a state cannot make a law impairing the obligation of contract, Congress has properly done so in the Bankruptcy Code under the Constitution's contracts clause (U.S. Const. art. I § 10, cl. 1). Even if Stockton's retirees held vested property interests, the court wrote, "the shield of the Contracts Clause crumbles in the bankruptcy arena." However, on October 30, 2014, the court confirmed a plan of adjustment for Stockton that left pension obligations unimpaired (because Stockton was not terminating its pension plans) but provided almost no recovery to certain other unsecured creditors.

From the Top

In its first bankruptcy decision of 2014 (October Term, 2013), the U.S. Supreme Court held on March 4, 2014, in Law v. Siegel, 134 S. Ct. 1188 (2014), that a bankruptcy court cannot impose a surcharge on exempt property due to a chapter 7 debtor's misconduct. In reversing a ruling by the Ninth Circuit, Law v. Siegel (In re Law), 2011 BL 148411 (9th Cir. June 6, 2011), cert. granted, 133 S. Ct. 2824 (2013), the Supreme Court concluded that the bankruptcy court overstepped the bounds of its statutory authority (under section 105(a) of the Bankruptcy Code) and inherent authority when it imposed on the debtor a $75,000 surcharge—the amount of the California "homestead exemption." The debtor engaged in litigation misconduct by falsely claiming, in an effort to defraud creditors, that his California homestead was encumbered by a lien securing a $168,000 purchase money loan provided by a personal friend. Litigation concerning the fabricated lien and the debtor's "egregious misconduct" caused the bankruptcy estate to incur $450,000 in legal fees and related expenses.

Writing for a unanimous Court, Justice Antonin Scalia reasoned that "[a] bankruptcy court may not exercise its authority to ‘carry out' the provisions of the Code, or its ‘inherent power . . . to sanction abusive litigation practices,' by taking action prohibited elsewhere in the Code." According to Justice Scalia, the bankruptcy court's surcharge contravened section 522 of the Bankruptcy Code, which gave the debtor the right to use California's "homestead exemption" to exempt $75,000 of equity in his home from the bankruptcy estate.

On March 25, 2014, the Supreme Court ruled in U.S. v. Quality Stores, Inc., 134 S. Ct. 1395 (2014), that severance payments made to employees who were involuntarily terminated prior to and during an agricultural retailer's chapter 11 case pursuant to plans which did not tie payments to the receipt of state unemployment insurance are taxable under the Federal Insurance Contributions Act ("FICA"). Writing for a unanimous Court (with Justice Kagan taking no part in the Court's consideration or decision), Justice Kennedy explained that: (i) "[a]s a matter of plain meaning," severance payments fit the definition of "wages" under FICA because "[t]hey are a form of remuneration made only to employees in consideration for employment"; and (ii) the provisions of the Internal Revenue Code (see 26 U.S.C. §§ 3401(a) and 3402(o)) governing income-tax withholding do not limit the meaning of "wages" for FICA purposes.

On June 9, 2014, the Court handed down its unanimous ruling in Executive Benefits Insurance Agency v. Arkison, 134 S. Ct. 2165 (2014), taking a small step forward in clarifying the contours of a bankruptcy judge's jurisdictional authority in the aftermath of the Court's groundbreaking and controversial 2011 ruling in Stern v. Marshall, 31 S. Ct. 2594 (2011). The Court held in Arkison that when a bankruptcy court is confronted with a claim which is statutorily denominated as "core" but is not constitutionally determinable by a bankruptcy judge under Article III of the U.S. Constitution, the bankruptcy judge should treat such a claim as a non-core "related to" matter that the district court reviews anew. The ruling eliminates any supposed "statutory gap" created by Stern, but it nonetheless left many potentially larger jurisdictional and constitutional questions unanswered.

For example, Arkison did nothing to help explain which claims, as a constitutional matter, can be finally determined by a bankruptcy judge. In addition, the Arkison Court expressly "reserve[d] … for another day" the question of "whether Article III permits a bankruptcy court, with the consent of the parties, to enter final judgment on a Stern claim."

In its fourth and final bankruptcy-related ruling of the 2013‒14 term, the Court handed down its decision on June 12 in Clark v. Ramaker, 2014 BL 162980 (June 12, 2014). In Clark, a unanimous Court held that an inherited individual retirement account is not exempt from a bankruptcy estate under section 522(b)(3)(C) of the Bankruptcy Code, which exempts "retirement funds to the extent that those funds are in a fund or account that is exempt from taxation" under certain provisions of the Internal Revenue Code.

On July 1, 2014, the Court granted certiorari in Wellness Int'l Network Ltd. v. Sharif, 134 S. Ct. 2901 (2014), where it will be asked once again to decide whether Article III of the U.S. Constitution permits the exercise of the judicial power of the U.S. by a bankruptcy court on the basis of litigant consent. Specifically, the Court will consider: (i) whether the presence of a state property law issue means that an action does not "stem from the bankruptcy itself," in the parlance of Stern; and (ii) whether under Article III bankruptcy courts can enter final judgments on the basis of litigant consent and, if so, whether consent can be implied.

On November 17, 2014, the court granted certiorari in a pair of cases—Bank of Am., N.A. v. Caulkett, No. 13-421, 190 L. Ed. 2d 388 (2014), and Bank of America, N.A. v. Toledo-Cardona, No. 14-163, 190 L. Ed. 2d 388 (2014), where it will consider whether, under section 506(d) of the Bankruptcy Code, a chapter 7 debtor may "strip off" a junior mortgage lien in its entirety when the outstanding debt owed to a senior lienholder exceeds the current value of the collateral. Section 506(d) provides that "[t]o the extent that a lien secures a claim against the debtor that is not an allowed secured claim, such lien is void." In Bank of Am., N.A. v. Caulkett (In re Caulkett), 566 Fed. App'x 879 (11th Cir. 2014), and in Bank of Am., N.A. v. Toledo-Cardona, 556 Fed. App'x 911 (11th Cir. 2014), the Eleventh Circuit ruled that a wholly unsecured junior lien is voidable under section 506(d).

On October 1, 2014, the Court agreed to review a Fifth Circuit ruling concerning a bankruptcy court's power to award fees to a law firm for defending its "core" fee application for services performed on behalf of a debtor. See ASARCO LLC v. Jordan Hyden Womble Culbreth & Holzer, P.C. (In re ASARCO LLC), 751 F.3d 291 (5th Cir. 2014), cert. granted sub nom. Baker Botts LLP v. ASARCO LLC, No. 14-103, 2014 BL 276138 (Oct. 2, 2014). The dispute concerns a $120 million base fee award for a law firm's work on mining giant ASARCO LLC's bankruptcy. The firm also received a $4 million merit enhancement for "rare and extraordinary" work. The Fifth Circuit upheld the enhancement bonuses but reversed the fees awarded for the cost of defending the core fee, ruling that the Bankruptcy Code "does not authorize compensation for the costs counsel or professionals bear to defend their fee applications."

On December 12, 2014, the Court agreed to review a ruling by the First Circuit that an order of a bankruptcy appellate panel affirming a bankruptcy court's denial of confirmation of a chapter 13 plan is not a final order (and therefore appealable under 28 U.S.C. § 158(d)) so long as the debtor remains free to propose an amended plan. See Bullard v. Hyde Park Sav. Bank (In re Bullard), 752 F.3d 483 (1st Cir. 2014), cert. granted, No. 14-116, 2014 BL 349325 (Dec. 12, 2014). The Second, Sixth, Eighth, Ninth, and Tenth Circuits have also held that such an order is not final so long as the debtor is still free to propose another plan. The Third, Fourth, and Fifth Circuits have adopted the minority approach that such an order can be final.

The Court also granted certiorari on December 12, 2014, in Harris v. Viegelahn, No. 14-400, 2014 BL 349342 (Dec. 12, 2014), in which it will consider whether undistributed funds held by a chapter 13 trustee must be distributed to creditors or revert to the debtor, a question that has divided courts for 30 years. The appeal stems from a Fifth Circuit decision holding that the undistributed payments held by a chapter 13 trustee at the time a debtor's case is converted to a chapter 7 liquidation must be distributed to creditors rather than returned to the debtor, on the basis of considerations of equity and policy. See Viegelahn v. Harris (In re Harris), 757 F.3d 468 (5th Cir. 2014). The Fifth Circuit's decision created a split with the Third Circuit's ruling in In re Michael, 699 F.3d 305 (3d Cir. 2012).

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