Equitable Subordination and Recharacterization: Looming Bankruptcy Litigation Threats
Attacking and Defending Preference Status of Lender, Creditor and PE Sponsor Secured Claims
Recording of a 90-minute CLE webinar/teleconference with Q&A
Conducted on Thursday, February 2, 2012
Recorded event now available
This CLE webinar will offer best practices for counsel to lenders, creditors and private equity sponsors to structure transactions and lending practices to protect their claims and maintain preference status against junior and unsecured creditors or borrowers facing insolvency or bankruptcy.
Description
Equitable subordination and recharacterization are asserted against secured creditors by junior or unsecured creditors to obtain recovery from highly leveraged debtors. Private equity (PE) sponsors addressing liquidity of their portfolio companies are vulnerable to attacks on their claims.
Recharacterization claims usually involve insiders like stockholders, directors and officers. However, the recent Fifth Circuit ruling in In re Lothian Oil indicates that the doctrine is not limited to corporate insiders and courts should scrutinize the debt instrument instead of the creditor’s status.
The Delaware bankruptcy court’s ruling in the WaMu case has implications for creditors holding substantial positions in bankruptcy. The court allowed the equity committee to seek equitable disallowance of claims held by hedge funds that traded claims while engaging in restructuring negotiations.
Listen as our authoritative panel of bankruptcy attorneys discusses the looming threats of equitable subordination and recharacterization in bankruptcy, and how lenders, creditors and PE sponsors can minimize this exposure and protect their claims.
Outline
- Overview of equitable subordination and recharacterization
- Equitable subordination
- Recharacterization
- Recent case law
- Litigation considerations
- Minimizing attacks on the claim
- Secured Lenders:
- Underwriting
- Collateral review
- PE Sponsors
- Anticipating liquidity problems
- Internal governance procedures
- Arms length transactions
- Management rights or other control of business operations
- Creditors
- Non-statutory insiders
- Earmarking defense
- Secured Lenders:
Benefits
The panel will review these and other key questions:
- How have the courts defined "inequitable conduct" to justify equitable subordination?
- What factors do the courts use to distinguish a loan transaction from an equity investment to justify recharacterization?
- What are the implications of the Fifth Circuit’s ruling in In re Lothian Oil for non-insider lenders and creditors?
- How can PE sponsors loaning money to their portfolio companies protect themselves from attack?
Faculty
Griffin S. Dunham,
Atty
MGLAW, Nashville, Tenn.
He concentrates his practice in the areas of Chapter 11 bankruptcy reorganizations, insolvency and distressed business restructuring matters, and commercial litigation involving business and individual clients. He assists businesses restructure debt through loan modifications and lender workouts. He has significant experience representing creditors to maximize recovery in bankruptcy proceedings.
Paul J. Ricotta,
Partner
Mintz Levin, Boston
He has more than 25 years of experience representing debtors and creditors in workouts, restructurings and commercial bankruptcy proceedings and in commercial finance transactions. He has developed a national reputation representing bondholders and indenture trustees (particularly in connection with tax-exempt bond debt) in workouts and Chapter 11 bankruptcy cases throughout the country.
Ordering
Online CLE - Audio Recording
Includes audio streaming of full program plus handouts (available 24 hours after live seminar).
CLE:
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(*Indicates that Strafford must report attendance.)
Online CLE Audio $297.00
Available 24 hours after the live event
Recorded Event
Includes full event recording plus handouts (available after live seminar).
CLE: Pre-approved for self-study credit in: AK, AZ, CA, CT, HI, MO, MT, NY, TX*, VT, WA, WV. Upon request, self-study credit is also available in: CO, FL, GA, ID, KY, ME, ND, NE, NH, NM, NV, OR, UT, WI, WY. If you are applying for self-study credit in one of these states, contact Strafford CLE at 1-800-926-7926 ext. 35 or CLE@straffordpub.com. (*Indicates that Strafford needs to process the CLE — see below to purchase this option.)
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Available three business days after the live event
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plus $9.45 S&H
Available ten business days after the live event
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Available 24 hours after the live event
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plus $9.45 S&H
Available ten business days after the live event
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Customer Reviews
The webinar was very informative on very pertinent matters and had a good flow.
Noam Wiener
Allen & Overy LLP
The program material was very well organized and thorough.
Laura Buckley
Higgs, Fletcher & Mack
The presentation was most interesting when it fit the substance into scenarios of actual lawyering.
Christopher Cahill
Lowis & Gellen LLP
The seminar was very insightful with a terrific grasp of the relevant case law and legal issues.
Gregory Fox
Friedman Kaplan Seiler & Adelman LLP
The program was very thorough, stayed on topic and was well organized.
Thad Wilson
King & Spalding LLP
Bankruptcy Law Advisory Board
Partner
Nixon Peabody
Partner
Potter Anderson & Corroon
Of Counsel
Haynes & Boone
Shareholder
Greenberg Traurig
Partner
Dechert
Shareholder
Vedder Price
Partner
Nixon Peabody
Partner
Kaye Scholer
Counsel
Skadden Arps Slate Meagher & Flom
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