Business Restructuring Review

In this issue:

• Commercial Loan Driven by "Naked Greed" Warrants Equitable Subordination of Claim
  A Montana bankruptcy court equitably subordinated a lender’s $232 million secured claim due to actions that "were so far overreaching and self-serving that they shocked the conscience of the court," but later vacated the ruling after a global settlement.
• Second Circuit Ruling Makes Pension Plan Termination in Bankruptcy More Expensive
  The court of appeals held that the termination premium payable upon a distress pension plan termination in bankruptcy becomes payable only upon the terminating employer’s receipt of a discharge, such that any claim based upon the premiums cannot be treated as a pre-petition general unsecured claim.
• Newsworthy
• In Brief: From the Top
  Watchdogs awaiting dispositive resolution of a circuit split on the power of bankruptcy courts to enjoin litigation against nondebtors under a chapter 11 plan were disappointed when the Court handed down its ruling in two consolidated appeals involving asbestos-related claims directed against former chapter 11 debtor Johns Manville Corporation.
• Limiting the Role of Business Judgment in Authorizing KERP Payments
  A Texas bankruptcy court ruled that nonordinary-course payments to an insider can be granted administrative expense priority only if the court finds, independent of the debtor’s business justification, that such payments are in the best interest of the parties.
• Exploring the Role of Creditors’ Committees in Directing the Affairs of a Chapter 11 Debtor
  An Illinois bankruptcy court granted a motion by a creditors’ committee to impose liens on the assets of a chapter 11 debtor’s nondebtor subsidiaries to secure unsecured claims and to restrict the ability of the debtor and its subsidiaries to enter into loan transactions and transfer bank deposits.
• Amendments to Russian Insolvency Law Enacted
  On April 28, 2009, the president of the Russian Federation signed into law amendments to the Russian Law on Insolvency that should be considered by all creditors doing business with financially troubled Russian companies, directors, and other controlling persons of Russian companies and participants in the market for distressed Russian assets.