Business Restructuring Review I January-February 2020

In This Issue:


A brief chronicle of the year's developments in corporate bankruptcy and restructuring [read more …]

Oil and Gas Industry Update: Sabine Oil Not the Last Word on Treatment of Gathering Agreements in Bankruptcy

In Monarch Midstream, LLC v. Badlands Production Company (In re Badlands Energy Utah LLC), 608 B.R. 854 (Bankr. D. Colo. 2019), the U.S. Bankruptcy Court for the District of Colorado denied a chapter 11 debtor's motion to sell its oil and gas assets free and clear of a gas gathering and processing agreement and a saltwater disposal agreement. The court found that the agreements were covenants that "ran with the land" under Utah law, thereby preventing a free and clear sale. In Alta Mesa Holdings, LP v. Kingfisher Midstream, LLC (In re Alta Mesa Resources, Inc.), Adv. Proc. No. 19-03609 (Bankr. S.D. Tex. Dec. 20, 2019), the U.S. Bankruptcy Court for the Southern District of Texas held that oil and gas gathering agreements could not be rejected by a chapter 11 debtor because the agreements formed real property covenants that ran with the land under Oklahoma law rather than executory contracts. In so ruling, both courts distinguished the landmark decision of the U.S. Court of Appeals for the Second Circuit in Sabine Oil & Gas Corp. v. Nordheim Eagle Ford Gathering, LLC (In re Sabine Oil & Gas Corp.), 734 Fed. Appx. 64 (2d Cir. May 25, 2018). [read more …]

Private Equity Update: 1st Circuit Reverses Imposition of Pension Plan Withdrawal Liability

In Sun Capital Partners III, LP v. New England Teamsters & Trucking Industry Pension Fund, 943 F.3d 49 (1st Cir. 2019), petition filed for reh'g en banc, Nos. 16-1376, 19-1002 (1st Cir. Dec. 6, 2019), the U.S. Court of Appeals for the First Circuit reversed a district court ruling imposing liability under the Employee Retirement Income Security Act of 1974 ("ERISA") on affiliated private equity funds due to their portfolio company's withdrawal from a multiemployer pension plan. The court concluded that: (i) the multifactored partnership test under relevant federal tax law that would establish "common control" under ERISA had not been satisfied; and (ii) there is no indication that Congress intended to impose liability under the circumstances of the case. [read more …]

"Single-Satisfaction Rule" Does Not Preclude Bankruptcy Trustee's Recovery of Mortgage Loan Proceeds After Avoidance of Mortgage Lien

In Jones v. Brand Law Firm PA (In re Belmonte), 931 F.3d 147 (2d Cir. 2019), the U.S. Court of Appeals for the Second Circuit affirmed lower court decisions that a chapter 7 trustee's avoidance of an unauthorized postpetition mortgage lien did not amount to a "double recovery" contrary to the "single-satisfaction rule" set forth in section 550(d) of the Bankruptcy Code. [read more …]

Stay Extended to Bar Litigation Against Chapter 15 Foreign Representatives but No Ruling on Extraterritoriality of Barton Doctrine

In McKillen v. Wallace (In re Irish Bank Resolution Corp. Ltd.), 2019 WL 4740249 (D. Del. Sept. 27, 2019), the U.S. District Court for the District of Delaware considered, but declined to decide, whether the U.S. common law "Barton Doctrine" applies extraterritorially to require parties attempting to sue a foreign representative in a chapter 15 case to first obtain permission to sue from the foreign court that appointed the foreign representative. Instead, the district court affirmed the bankruptcy court's decision to extend the automatic stay to prevent potential plaintiffs from filing an adversary proceeding against a chapter 15 debtor's foreign representatives because allowing the plaintiffs' litigation to proceed would be, in effect, a judgment or finding against the debtor in contravention of the Bankruptcy Code's automatic stay. [read more …]

Resurgence of Bifurcation Approach to Priority of Straddle Year Taxes in Bankruptcy

In In re Affirmative Ins. Holdings, Inc., 607 B.R. 175 (Bankr. D. Del. 2019), the U.S. Bankruptcy Court for the District of Delaware ruled that, contrary to the perception of certain courts and commentators that the Bankruptcy Code was amended in 2005 to confer administrative priority on claims for "straddle year" corporate income taxes, claims for such taxes must be bifurcated into administrative and prepetition unsecured components in accordance with the plain meaning of the relevant Bankruptcy Code provisions. [read more …]

In Brief: Fifth Circuit Vacates Ruling that Make-Whole Premium Is Disallowed Unmatured Interest but Holds Firm on Bankruptcy Code v. Chapter 11 Plan Impairment

In In re Ultra Petroleum Corp., 2019 WL 6318074 (5th Cir. Nov. 26, 2019), the U.S. Court of Appeals vacated a ruling handed down earlier in 2019 concluding that a chapter 11 plan disallowing noteholder claims for a make-whole premium did not impair the claims because they were disallowed as claims for unmatured interest under section 502(b)(2) of the Bankruptcy Code. In its latest decision, Fifth Circuit reaffirmed its previous ruling regarding impairment but remanded the case below to determine whether the noteholders' claims for a make-whole premium might be allowed under the pre-Bankruptcy Code "solvent-debtor exception" to the general rule disallowing claims for unmatured interest. [read more …]


Jones Day was ranked #1 in the BTI Consulting Group's 2020 Client Service A-Team report for the fourth consecutive year and the 12th time since BTI has been publishing its results, based on independent research. Jones Day was awarded "Best of the Best" status in all 17 BTI activities that drive superior client service.

In The M&A Advisor's 14th Annual Turnaround Awards, Jones Day won the awards for: (i) "Chapter 11 Reorganization of the Year ($10B or more)" for the restructuring of iHeartMedia, Inc.; (ii) "Cross-Border Restructuring of the Year" for the restructuring of M&G Chemicals; (iii) "Out-of-Court Restructuring of the Year ($100mm or More)" for the acquisition of Black Box Corporation by AGC Networks; and (iv) "Restructuring of the Year ($500 mm to $1B)" for the restructuring of Syncreon.

An article written by Paul M. Green (Houston) and Mark G. Douglas (New York) titled "Presumption of Filed Claim's Validity and Amount Does Not Apply in Proceeding to Determine Secured Amount of Claim" was posted on the November 19, 2019, Harvard Law School Bankruptcy Law Roundtable.

An article written by Corinne Ball (New York) and Miguel Eaton (Washington) titled "First Circuit Finds Co-Investing Private Equity Funds Did Not Bear Liability for Bankrupt Portfolio Company's Underfunded Pension" was published in the December 24, 2019, issue of the New York Law Journal.

An article written by Carl E. Black (Cleveland) titled "An Overview of the Fiduciary Duties of Directors and Officers of Financially Distressed Corporations" was published in the November/December 2019 issue of Pratt's Journal of Bankruptcy Law. Jonathan Noble Edel (Cleveland) assisted in preparing the article.

On December 11, 2019, Kevyn Orr (Washington) was a guest on the Detroit Today radio show in a segment titled "Five Years After Detroit's Bankruptcy, Kevyn Orr Stands By Decisions." The segment focused on Orr's service as Emergency Manager of the City of Detroit.

An article written by Mark A. Cody (Chicago) and Mark G. Douglas (New York) titled "Mixed Signals on Enforcement of Provisions Precluding Bankruptcy Filing Absent Lender's Consent" was published on November 18, 2019, by Lexis Practice Advisor.

On November 21, 2019, Dan T. Moss (Washington) was a featured guest commentator in an "Eye on Bankruptcy" webinar sponsored by the American Bankruptcy Institute.

An article written by Dan T. Moss (Washington) and Mark G. Douglas (New York) titled "Chapter 15 Gap Period Relief Subject to Preliminary Injunction Standard But No Adversary Proceeding Required" was published on November 21, 2019, by Lexis Practice Advisor.

An article written by Daniel J. Merrett (Atlanta) and Mark G. Douglas (New York) titled "First Impressions: Ninth Circuit Rules That Notice of Proposed Substantive Consolidation Must Be Given to Creditors of Non-debtor" was published on November 21, 2019, by Lexis Practice Advisor.

An article written by Dan T. Moss (Washington) and Mark G. Douglas (New York) titled "Recent Developments in Cross-Border Insolvency and Recognition of Foreign Bankruptcy Proceedings in the US Bankruptcy Courts" was posted on the December 3, 2019, Harvard Law School Bankruptcy Law Roundtable.

An article written by Daniel J. Merrett (Atlanta) and Mark G. Douglas (New York) titled "How 9th Circ. Views The 'Substantive Consolidation' Debate" was published in the December 5, 2019, edition of Law360.

An article written by Carl E. Black (Cleveland) and Jonathan Noble Edel (Cleveland) titled "Overview of Limitations on Employee Compensation in Bankruptcy" was published in the December 2019 issue of The Bankruptcy Strategist.

An article written by Brad B. Erens (Chicago) and Mark G. Douglas (New York) titled "Chapter 11 Plan Distributions Are Not Collateral Covered by Intercreditor Agreement's Waterfall Provision" was published in the February 2020 issue of Business Credit.
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