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This session will discuss bankruptcy issues that arise in connection with financing structures common at various stages in the growth of life sciences company, including early stage venture lending , drug development lending, royalty monetizations, and synthetic royalties/revenue interest financings and other hybrid finance structures. Bankruptcy issues include treatment of rights in IP and licensed IP as collateral and under royalty sale structures; executory contract issues with respect to material contracts related to recovery of value of financing (e.g., supply contracts for manufacture of drug); secured or unsecured status under synthetic and hybrid structures; and structuring deals to mitigate bankruptcy.
Recent cases will be discussed to illustrate the features of common structures and treatment of bankruptcy risks and issues by courts (cases include PhaseBio, Mallinckrodt and Clovis).

The Supreme Court's June 2024 decision in Truck Insurance Exchange v. Kaiser Gypsum Company held that insurers qualified as "parties in interest" under Section 1109(b), entitling those insurers to object to a plan of reorganization. This landmark decision is likely to have far-ranging effects in the reorganization world and affect debtors and creditors committees alike. The ABI should host a panel examining the expected extent and impact of those effects, including that:
- debtors and creditors should prepare for the fact that insurance carriers will start getting a seat at the negotiating table;
- the insurance industry may view Truck as not merely granting a seat at the table, but also as an invitation to test the boundaries of its newly granted position;
- Truck presents an existential threat to the already-risky tack of chapter 11 plans' limiting director and officer liability to only insurance proceeds;
- insurance carriers will likely leverage Truck to urge courts in jurisdictions that deem insurance proceeds to be property of the estate to reexamine the status quo; and
- insurance carriers will begin to horse-trade for concessions in connection with first-day motions and debtors' purchasing tail coverage and run-off policies post-petition.

Keynote Overview

By providing a keynote speech to your team, I will guide them through fun and engaging stories from my own personal life experience. With a lifetime of experience as a congenital quad amputee, seasoned Paralympic swimmer, and accessibility designer, I bring a worldly perspective unmatched. I thrive to find unique and out-of-the-box solutions to overcome any form of obstacle that stands in the way. Alongside my mission statements of Using What You’ve Got and Components of You, my unique outlook and determination serve as a model: we are all more than any one of our characteristics.

Workshop Discussion Overview

Built inside of the keynote, an empowering conversation will focus on the Components of You. This workshop will allow participants to reflect on pivotal moments in their life. There will also be an opportunity to share in small groups as well as with everyone depending on comfort level.

Congress granted creditors a right to an accelerated recovery of their claims through FRBP 3001. This rule is the foundation for selling a bankruptcy claim but, until recently, the integrity and liquidity of the claims market was challenged by an absence of the typical features of modern capital markets. Few creditors were able to identify potential purchasers, conduct price discovery and maximize competition for their claims. Online marketplaces developed, making a global market and rapid price discovery easily accessible, and allowing unrestricted competitive pressures to inform bid/ask price disclosure and immediately actionable supply and demand. Although the market has undergone a significant transformation, a number of recent cases have tested the rules and procedures of bankruptcy courts, clerks and claim administrators to properly manage the tens of millions of claims, and hundreds of billions of dollars owed annually to creditors who enjoy a right to liquidity.

These transactions involve transfers of property securing a loan to the creditor in satisfaction of the debt. The applicable federal tax rules determines the amount of taxable gain realized by the debtor. The rules also determine if the creditor realizes a beneficial bad debt deduction and/or gain or loss on its acquisition. A central issue is how tax law deals with the question of the fair market value of the property. This session will illustrate the alternatives to debtors and creditors and potential planning considerations impacting after tax cash results to both parties.

I think to flush this out, I need to speak with someone so explain the angle. The bankruptcy rules have just been restyled and the history and process are very interesting. Also it could be discussed how rulemaking works and how to submit your suggestions for rule changes and the time line etc. It could also be discussed what is currently in the pipeline and maybe even do some polling. I am currently on the Advisory Committee on Bankruptcy Rules and some interesting things are going on.

Mindfulness and stress-reduction
The power of positivity and mental fitness
Understanding, reducing, and managing bias
Effectively managing change and uncertainty
Keys to strengthen your emotional intelligence
Conflict management in the workplace and beyond
Performance management conversations and feedback
Facilitating meaningful conversations on sensitive topics
Understanding and strengthening strategic thinking skills
Appreciating differences – building a neuro-inclusive workplace
Understanding and handling self-doubt and imposter phenomenon

Specifically, the issue relates to how and when such communications are protected (or put the other way, is it subject to discovery?). Candidly, I have heard the matter tangentially discussed at a few CLEs and cringed at certain of the responses given by the Subchapter V panelists. I do not think the responses were all correct, and I certainly would not follow some of the suggested conduct. I am not meaning to be critical. I feel for the panelists who were not really prepared to discuss the topic, given that it was tangential to the prepared presentation, and there had not been much authority on the topic.

My course of action when I serve as the Subchapter V Trustee is always to state that I will not voluntarily repeat anything if asked not to and normally only share information that I have been specifically authorized to share. But, I always emphasize that communication with me is likely subject to discovery absent further order of the Court. In two of my cases, confidentiality became an issue and we prepared to file pleadings to have the matter addressed; but the issue ultimately was resolved without the need for Court intervention. I certainly expect this to continue to be a prevalent concern in many matters.

I originally wanted to mention this issue to the Subchapter V Taskforce but, also, believe a panel on the nature of communications with the Subchapter V Trustee would be a great topic. There is so much that could be explored/discussed: requirements of Subchapter V Trustee to keep communications confidential, does counsel violate duties to clients if they do not seek such communication in discovery for contested matters, ways to address confidentiality of communications with Subchapter V Trustee (such as local rule, sua sponte inclusion in orders like certain jurisdictions are doing for the escrowing of Subchapter V monthly fee payments, and/or upon motion, notice and entry of order similar to the motions that became the norm in large, traditional 11s to address communications with the creditors committee) and so much more! If you agree that this is a topic deserving more consideration, I would be happy (and welcome the opportunity) to further collaborate as well as serve on any such panel.

Lenders face a fundamental problem in life: the math, from the onset, favors the borrower. This is nowhere better displayed than in real estate transactions, where most debt is non-recourse and secured at the property level. Much legal work in a real estate transaction can be viewed as an effort to make up for and possibly invert the inherent disadvantages of the lender. This session aims to provide an intuitive, practical understanding of the role of option theory in structuring and valuing the positions of borrowers and lenders.