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Gas prices have plummeted more than 70 percent in the last two years.[1] This is financially devastating for the oil and gas industry. To cover the “souring energy loans” secured by oil and gas properties and proceeds, U.S. banks have set aside $2.5 billion.
Recently, in Zachary v. Cal. Bank & Trust,[1] the U.S. Court of Appeals for the Ninth Circuit agreed with the Fourth, Fifth, Sixth and Tenth Circuits in holding that the absolute priority rule continues to apply to individual chapter 11 reorganizations, notwithstanding the 2005 BAPCPA amendments to the Bankruptcy Code. The Zachary decision clearly enhances the leverage of unsecured creditors in individual chapter 11 cases.
The Ontario Court of Appeal[1] recently affirmed the decision of the Ontario Superior Court of Justice in NortelNetworks Corporation (Re)[2] that the common law “Interest Stops Rule” applies in proceedings under Canada’s Companies’ Creditors Arrangement Act (CCAA).[3] In the context of the joint allocation trial conducted between the Ontario court and the Delaware bankruptcy court, Justice Newbould of the Ontario Superior Court of Justice direct
In its January 2016 decision in Boomerang Tube Inc.,[1] Judge Mary F. Walrath of the Delaware Bankruptcy Court considered the U.S. Trustee’s (UST’s) objection to the retention application of counsel for the unsecured creditors’ committee, which took issue with a provision indemnifying committee counsel for further fees and expenses incurred for any successful defense of their fees.
The Unsecured Trade Creditors' Committee's call discussed “gifting” and other recent developments regarding application of the absolute priority rule. In In re ICL Holding, the Third Circuit Court of Appeals recently held that “gifting” is permissible in section 363 sales. Conversely, in prior opinions, both the Second and Third Circuits have held that “gifting” is not permissible in the context of a chapter 11 plan.
