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August 14, 2015  | Posted by Adam C. Rogoff & Anupama Yerramalli, Co-Editors | Permalink
Welcome to Broken Bench Bytes, a weekly blog covering notable, recent decisions affecting corporate bankruptcy, restructuring and turnarounds. The goal of this blog is frequency of postings while, in a time of information overload, being selective on what we think is of most interest to our readers. In three sections, each week's blog postings succinctly cover the latest court developments impacting today's bankruptcy and restructuring process. "The Bottom Line" is the decision's sound-byte. For more detail, "What Happened" covers key background and the court's reasoning -- a bit more flavor for your Byte. And finally, in "Why this Case is Interesting," we put the case into context for practical issues affecting distressed situations. Our weekly Bytes are not law review articles; they are bite-sized nuggets of important decisions.
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December 2, 2015 | Posted by Kramer Levin | Permalink
As of December 1, 2015, a new bankruptcy form for filing proofs of claim has gone into effect. read more
October 8, 2015 | Posted by Kramer Levin | Permalink
This article, by partners Stephen Zide and P. Bradley O'Neill and associate Stephen Blank, discusses the benefits of a prepackaged bankruptcy and examines the successful prepackaged bankruptcy of Genco Shipping and Trading Ltd. read more
August 14, 2015 | Posted by Kramer Levin | Permalink

Once a giant of the U.S. economy, the coal industry now faces uncertain times due to lower global demand, a boom in domestic natural gas production, over-levered capital structures and stringent environmental regulations. This depressed environment has attracted the attention of certain distressed investors and alternative investment funds looking to capitalize from an eventual upswing in the coal industry.


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January 6, 2015 | Posted by Andrew Pollack | Permalink

             With FIBA being approved by the House of Representatives and moving on to review in the Senate, interested parties will be closely monitoring the Act’s progress. Should FIBA be enacted into law, financial institutions and creditors alike will keep a close eye on the application and interpretation of the new sections of the Bankruptcy Code – particularly §1192, allowing courts to consider the implications that any decision may have on the “financial stability of the United States.” With a broad purpose, how FIBA cases play out in practice will shape the future of financial institution bankruptcies.

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November 13, 2014 | Posted by Nathaniel Allard | Permalink

The Bottom Line:

In In re Caribbean Petroleum Corp., et al., No. 13-4415 (3d Cir. Sept. 18, 2014), the Third Circuit affirmed that tort claimants did not have priority over other general unsecured creditors in the distribution of certain insurance proceeds, based on the plain language of the Bankruptcy Court’s order approving the buyback of an insurance policy and the related terms of a confirmed plan of liquidation which provided for pro rata distribution of the purchase/settlement proceeds to all holders of general unsecured claims (including tort claims who otherwise had direct action claims against the insurer). In its ruling, the Third Circuit overruled arguments by an alleged joint tortfeasor named as a co-defendant in lawsuits against the Debtors that tort claimants (including itself) had priority over insurance settlement proceeds because Puerto Rico provides tort victims a statutory right of direct action against the insurance company. In rejecting such arguments in favor of a plain reading of the plan and confirmation order, the Third Circuit also noted the arguments should have been raised previously, as an objection to the relevant Bankruptcy Court order and proposed plan, rather than a year and a half after confirmation.

Why the Case is Interesting:

On a broad level, the case reinforces the power of a plain language reading of operative documents, with any party wishing to overcome such a reading facing an uphill climb. The case also highlights the necessity to timely raise issues and the consequences of delay – even if the claim might have had merit: “In sum, while sharing liability insurance proceeds with other unsecured creditors may be unpalatable for Tort Claim holders, and if timely raised, arguably implicated public policy concerns in light of Puerto Rico’s direct action statute, that is what the Buyback Order and Plan unambiguously provided.” (Emphasis added). Unrelatedly, the decision declines to address certain issues that were not raised below and thereby waived; notably, arguments that the Buyback Order and Plan improperly discharged third party (tort) direct claims against a non-debtor (the insurer). The structure used in Caribbean Petroleum is not uncommon to settle coverage disputes with insurers in tort cases – whereby insurance companies will seek to settle such coverage disputes by repurchasing their policies under section 363 “free and clear” of claims and obtaining plan discharges in exchange for the settlement payment. The facts of Caribbean Petroleum would have required considering that the third party claims being discharged are direct action claims and not derivative rights of the estate. Likewise waived by not being timely raised, these issues remain for another day.

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