HHR Bankruptcy Report

Category Archives: Second Circuit

Subscribe to Second Circuit RSS Feed

The Gate Swings Shut: Second Circuit Ruling Narrows Restructuring Limitations.

Posted in Chapter 11, Second Circuit, Trust Indenture Act
After a 2014 decision in the Southern District of New York holding that section 316(b) of the Trust Indenture Act (“TIA”) barred any non-consensual restructuring that impaired a creditor’s actual ability to receive payment, issuers, creditors and the financial markets more generally have been uncertain as to the contours of permissible out-of-court restructurings.[1]   The recent… Continue Reading

Second Circuit Provides Guidance on Subordination of Claims Under Section 510(b)

Posted in Claims Subordination, Second Circuit, Section 510(b)
In a recent opinion providing guidance to bankruptcy courts on a developing issue of law, the Second Circuit affirmed a decision of the District Court for the Southern District of New York subordinating contribution claims pursuant to section 510(b) of the Bankruptcy Code because they arose from the purchase or sale of a security of… Continue Reading

Second Circuit Stands By Expansion of Section 363 Review in Chapter 15 Proceedings

Posted in Chapter 15, Second Circuit, Section 363
On Wednesday, January 14th, 2015, the Second Circuit declined to grant an en banc review of its holding requiring a full Section 363 review of a claims sale in a Chapter 15 proceeding in the case of In Re: Fairfield Sentry Ltd.  This decision left intact the Second Circuit’s earlier holding that dramatically expanded the… Continue Reading

Second Circuit Hears Arguments in Important Test of Safe Harbor Provisions

Posted in Chapter 11, Safe Harbor Provisions, Second Circuit
On November 5, 2014, the Second Circuit (Judges Winter, Droney, and Hellerstein) held oral arguments in In re Tribune Litigation (Case No. 13-3992) and Whyte v. Barclays Bank PLC (Case No. 13-2653).  As we outlined here, both cases consider the reach of the safe harbor provisions found in section 546 of the Bankruptcy Code that… Continue Reading

Original Issue Discount in a Fair Market Value Exchange Is an Allowable Claim in Bankruptcy

Posted in Bankruptcy Claims, Debt Exchanges, Second Circuit
Companies struggling to address liquidity problems are often attracted to debt-for-debt exchanges because such exchanges accomplish many of the same purposes as refinancing without requiring upfront cash payments, except to cover transaction costs and professional fees.  By restructuring debt obligations, a financially distressed company may avoid default and escape bankruptcy.  Partaking in a debt exchange… Continue Reading

Argentina Files Petition to the U.S. Supreme Court

Posted in Argentina, Foreign Sovereign Immunities Act, SCOTUS, Second Circuit, Sovereign Debt
On February 18, 2014, Argentina filed a petition asking the United States Supreme Court to review the Second Circuit’s decision affirming the District Court’s decision requiring Argentina to pay a group of holdout bondholders (called “vulture funds” by Argentina’s counsel) 100% of the monies owed to them.  As we discussed here, here, and here, the… Continue Reading

Second Circuit Rejects Argentina’s Request for Reconsideration

Posted in Argentina, Cross-Border Restructuring, Second Circuit, Sovereign Debt
On November 18, 2013, the Second Circuit issued an order denying Argentina’s petition for rehearing of the court’s decision upholding an injunction that barred Argentina from paying holders of restructured debts while “holdout” creditors remain unpaid.  NML Capital, Ltd. v. Republic of Arg., Case No. 12-105, Docket No. 1035 (2d Cir. Nov. 18, 2013).  As… Continue Reading

UPDATED: Crying for Argentina: Hedge Funds Initiate Litigation To Collect On Sovereign Debt

Posted in 28 USC section 1602 et seq., Argentina, Foreign Sovereign Immunities Act, Second Circuit, Sovereign Debt
On August 23, 2013, the Second Circuit affirmed  the District Court’s decision, which held that Argentina must pay a group of holdout bondholders 100% of monies owed to them.  As we outlined in June, the long-running litigation dates to Argentina’s 2001 default on $100 billion of sovereign debt. Earlier this week, the U.S. Supreme Court… Continue Reading

Crying for Argentina: Hedge Funds Initiate Litigation To Collect On Sovereign Debt

Posted in 28 USC section 1602 et seq., Argentina, Second Circuit, Sovereign Debt
When sovereign states become insolvent or default on their debt, there are no statutory bankruptcy protections in place, such as the automatic stay, to orderly distribute assets and prevent litigation to collect on defaulted debt.  The alternative to statutory bankruptcy protection is frequently debt restructuring proposals that force debt holders to accept deeply discounted exchange… Continue Reading