Category Archives: Analysis

Bitcoins in Bankruptcy: Trouble Ahead for Investors and Bankruptcy Professionals?

It is hard to ignore the media attention surrounding Bitcoin these days. Within the last few months, the virtual currency has surged to new highs, was the focus of a Congressional hearing, and was the subject of comments by former Federal Reserve Chairman Ben Bernanke, who stated that it and other such currencies “may hold long-term promise.” As Bitcoin gains legitimacy, companies offering Bitcoin-related services have sprouted. As with any new industry, however, although there may be spectacular successes, there also will be many failures. A reminder of this is that amid the frenzy, a company named Alydian recently filed the first Bitcoin-related bankruptcy. Accordingly, Bitcoin users and investors in Bitcoin companies should be aware that the qualities of Bitcoin that make it attractive outside of bankruptcy, could present major difficulties in a bankruptcy proceeding. Continue reading

In re Hostess Brands, Inc.: Southern District of New York Bankruptcy Court Refuses to Send Cash Collateral Dispute to Arbitration

On January 7, 2013, the Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York held that a dispute concerning the debtors’ use of cash collateral was not subject to arbitration, notwithstanding a broad arbitration clause in the parties’ underlying agreement, because the decision to allow a debtor to use cash collateral constituted a “core” issue and was a fundamental aspect of the bankruptcy process. In re Hostess Brands, Inc., No. 12-22052 (RDD), 2013 WL 82914 (Bankr. S.D.N.Y. Jan. 7, 2013). Continue reading

UPDATE: Court Rejects CalPERS’ Efforts to Lift Stay In San Bernardino Case

In a ruling predicted by the Restructuring Review Blog last month, Judge Meredith A. Jury of the U.S. Bankruptcy Court for the Central District of California rejected arguments by CalPERS that the Bankruptcy Court should lift the automatic stay and … Continue reading

2012 Year in Review – Part 2

To our readers:

From the Supreme Court weighing in on a chapter 11 case to Bankruptcy Court opinions that may profoundly impact venue selection, many important bankruptcy developments occurred in Restructuring Review’s inaugural year. Below is Part II in our first annual year-end list of the most significant decisions and developments in 2012. This list is presented chronologically. We’d love to hear your feedback as to what you think are the most important events of the year.

We appreciate you visiting Restructuring Review this year and look forward to providing you with frequent insight and analysis in 2013.

Best wishes for a happy and healthy holiday season.

Continue reading

2012 Year In Review – Part 1

To our readers:

From the Supreme Court weighing in on a chapter 11 case to Bankruptcy Court opinions that may profoundly impact venue selection, many important bankruptcy developments occurred in Restructuring Review’s inaugural year. Below is Part I in our first annual year-end list of the most significant decisions and developments in 2012. Part II will be posted shortly. This list is presented chronologically. We’d love to hear your feedback as to what you think are the most important events of the year.

We appreciate you visiting Restructuring Review this year and look forward to providing you with frequent insight and analysis in 2013.

Best wishes for a happy and healthy holiday season. Continue reading

Because of Winn-Dixie? SDNY Bankruptcy Court Looks Beyond Literal Compliance with Venue Statute and Transfers Patriot Coal Cases to Eastern District of Missouri

On November 27, 2012, in a ruling that undoubtedly will impact the choice of venue for many large corporate bankruptcies in the future, Judge Shelley C. Chapman of the United States Bankruptcy Court for the Southern District of New York transferred venue of the chapter 11 cases of Patriot Coal Corporation and ninety-eight of its affiliates to the Eastern District of Missouri. Drawing on an array of jurisprudence regarding venue, Judge Chapman found that notwithstanding literal compliance with the applicable statute, the New York domicile of two of the debtors was insufficient to establish venue for all ninety-nine cases in the Southern District of New York when the two debtors were formed on the eve of the commencement of the chapter 11 cases admittedly for the sole purpose of establishing venue. In re Patriot Coal Corp., 12-12900-SCC (Bankr. S.D.N.Y. Nov. 27, 2012) [docket no. 1629]. The Patriot decision is the latest in a line of recent decisions by courts in the Southern District of New York and the District of Delaware granting motions to transfer venue to other districts. The decision is notable in that it strongly discourages the practice of “bootstrapping” a corporate bankruptcy case to the case of a recently formed affiliate in New York when the debtor has no meaningful presence in the jurisdiction, change of venue is requested by economic parties in interest, and moving the case is unlikely to inflict demonstrable economic harm to the estate. Continue reading

U.S. Second Circuit Requires Argentina to Pay Defaulted Sovereign Debt Under “Equal Treatment” Clause

On 26 October 2012, the United States Court of Appeals for the Second Circuit upheld permanent injunctions designed to remedy Argentina’s breach of a promise to pay certain bondholders after a 2001 default on its sovereign debt. Relying on an “equal treatment” clause which provided that payment of the bonds ranked at least equally with Argentina’s other present and future bond issuances, the court held that Argentina could not discriminate against the defaulted bonds in favor of bonds issued in its 2005 and 2010 sovereign debt restructurings. Accordingly, the court enjoined Argentina from making payments on the 2005 and 2010 bonds without making comparable payments on the defaulted bonds. Continue reading

Developments in European Restructurings

Cadwalader partner Richard Nevins recently sat down to discuss developments in European restructurings with Doug Mintz, Restructuring Review’s Co-Editor-in-Chief and Cadwalader Special Counsel. Continue reading

Hostess to Liquidate

After a final mediation session between Hostess and its unions failed to put Hostess’s reorganization back on track, Bankruptcy Judge Robert Drain authorized the orderly wind down of Hostess’s operations. As a result, Hostess will prepare to sell its assets and shut down its factories. However, a purchaser may seek to restart the production of the beloved baked goods such as Twinkies, Ho-Hos and Donettes. Continue reading

Hostess Does Not Liquidate, Set to Mediate With Union

Reports of Twinkie the Kid’s death have been exaggerated. Despite widespread mainstream media reports of Hostess’ impending liquidation, the court has not yet approved liquidation. To the contrary, on November 19, 2012, after a brief hearing on Hostess’s emergency motions to begin the wind down of its operations, Hostess and its two main unions agreed to attend a confidential mediation session. At the mediation, Bankruptcy Judge Robert Drain intends to determine if the parties can avoid liquidation. Continue reading