Webcast – The New Rules of Engagement in the World of Bankruptcy: Make Wholes / Prepayment Premiums and Cram Down

November 19, 2014

​In recent years, it’s typically been the case that secured first lien lenders are in the driver’s seat in any restructuring, insofar as they had the ability to control the timing of the case, the terms and conditions of any priming dip loans, and the successful plan exit.

Yet the recent decision by the Momentive bankruptcy court upends the status quo. Among other things, extrapolating from supreme court precedent in the Chapter 13 context, the decision endorses the idea that a debtor can “cram up” secured creditors with a new secured note paying a below market interest rate. It also reinforces the recent trend in the case law disallowing “makewhole” claims absent clear and explicit language in the governing debt documentation.

The decision, from a highly respected court in the Southern District of New York, significantly alters the restructuring landscape from both a legal and practical perspective and is likely to have a material impact on the strategies, remedies and recoveries of secured and unsecured lenders, providers of dip and exit financing, and official and ad hoc creditor committees and the distressed investor community.

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Panelists:

Robert Klyman — Robert is a partner in the Los Angeles office of Gibson, Dunn & Crutcher and a member of the Business Restructuring and Reorganization and the Corporate Department. Robert represents debtors, committees, acquirers, lenders and boards of directors. His experience includes advising debtors in connection with traditional, prepackaged and “pre-negotiated” bankruptcies; representing lenders and other creditors in complex workouts; counseling strategic and financial players who acquire debt or provide financing as a path to take control of companies in bankruptcy; structuring and implementing numerous asset sales through Section 363 of the Bankruptcy Code; and litigating complex bankruptcy and commercial matters arising in chapter 11 cases, both at trial and on appeal. Robert has been widely and regularly recognized for his debtor and lender work as a leading bankruptcy and restructuring attorney by Chambers USA; named as one of the world’s leading Insolvency and Restructuring Lawyers by Euromoney; listed in the K&A Restructuring Register, a leading peer review listing, as one of the top 100 restructuring professionals in the United States; named as a “Top Bankruptcy M&A Lawyer” by The Deal’s Bankruptcy Insider; named as one of the 12 outstanding bankruptcy lawyers in the nation under the age of 40 (in 1999, 2000, 2002 and 2004) by Turnarounds & Workouts; and one of “20 lawyers under 40” to watch in California by The Daily Journal.

David Feldman— David is a partner in the New York office of Gibson, Dunn & Crutcher and Co-Chair of Gibson Dunn’s International Business Restructuring and Reorganization Practice Group. David’s practice focuses on the representation of companies, private equity firms and hedge funds in a variety of bankruptcy cases, out-of-court restructurings, and distressed asset and debt transactions. He regularly represents several major private equity and investment firms in connection with out-of-court and in-court restructuring of portfolio companies, sale and acquisition of distressed portfolio companies, and restructurings at the fund level. David is consistently ranked as a leading Bankruptcy and Restructuring lawyer by Chambers USA: America’s Leading Lawyers for Business, noting that he “is very smart,” and “very experienced,” and highlighting “his in-depth understanding of technical issues” and his “fantastic strategic vision.” In addition, he was also named as one of the top Bankruptcy and Creditor-Debtor Rights lawyers by The Best Lawyers in America©, and by Investment Dealers’ Digest as one of the Top 40 Under 40 Dealmakers of 2007. He is the author of “The Pervasive Problem of Numerosity” published online by Law360 on June 2, 2010 at law360.com and “Appointing Equity Committees: Insolvency Is One of Several Factors Courts Consider in Making Determination,” New York Law Journal, Corporate Restructuring & Bankruptcy Special Section, August 8, 2004.

Matthew Williams — Matt is a partner in the New York office of Gibson, Dunn & Crutcher and is a member of Gibson Dunn’s Business Restructuring and Reorganization Practice Group. He represents financial institutions, creditor groups, committees and debtors in complex restructurings. He has taken a lead role in numerous high-profile restructurings and cross-border proceedings. In addition, a significant component of Matt’s practice consists of his representation of numerous hedge funds in connection with their analyses of complex capital structures and their investments in distressed situations. He has written numerous articles discussing debt recharacterization, purchasing claims in distressed companies and issues involving official committees. He is the author of a book chapter regarding international insolvency and Chapter 15 of the Bankruptcy Code, and his insights on bankruptcy and business issues have been frequently cited in numerous publications and by numerous organizations, including the Wall Street Journal, Bloomberg Business News, Law360 and others. Matt has been consistently ranked among the top Bankruptcy and Restructuring lawyers in New York by Chambers USA: America’s Leading Lawyers for Business for his “exemplary legal skills, superb intelligence and exceptional forward-thinking,” his “winning combination of business acumen and legal expertise” and “detail-oriented approach.” He is praised by creditor and bondholder clients as a “fantastic young partner who gets the issues, is great at working with hedge funds, and understands the way we think about the world” and someone who “gives good commercial and practical advice.” In 2010, he was recognized as one of 12 “Outstanding Young Restructuring Lawyers” in the nation by Turnaround & Workouts Magazine. That same year, Law360 called him one of the “Rising Stars” in restructuring and “one of the 10 bankruptcy attorneys under 40 to watch.”