Leveraged Buyout Transactions Challenged in Bankruptcy

Litigating Fraudulent Transfer Claims Against Lenders, Equity Purchasers and Shareholders

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, March 28, 2012

Recorded event now available

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Program Materials

This CLE webinar will update practitioners on the latest challenges to leveraged buyout transactions in bankruptcy. The panel will explain the implications of particular deal structures, review underlying legal theories of creditor challenges, and outline best practices for mitigating risk or maximizing recovery.

Description

As many of the leveraged buyout transactions in recent years head into bankruptcy, creditors are aggressively attacking these deals, bringing fraudulent transfer claims against lenders, equity purchasers and shareholders.

The Lyondell case, one of the largest leveraged buyout/fraudulent transfer cases to date, involved a number of novel and complex issues. Sellers and equity firms in LBOs must carefully consider the effect of buyouts on the target company’s creditors.

The Tribune bankruptcy case may set precedents on leveraged buyouts and the protections afforded shareholders who sell stock from an LBO deal. The Section 546(e) settlement payment safe harbor was rejected as a defense in the McMenamin's Grill case.

Listen as our authoritative panel of bankruptcy attorneys discusses recent trends in fraudulent transfer challenges to leveraged buyout transactions and different approaches to mitigate risk of, or maximize recovery in, an avoidance action.

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Outline

  1. Avoidance actions: standards in the LBO context
    1. Reasonably equivalent value
    2. Insolvency or unreasonably small capital
    3. Collapsing loan transactions
    4. Section 546(e) settlement payments
  2. Recent LBO/fraudulent transfer litigation
    1. Lyondell
    2. Tribune Co.
    3. Extended Stay
    4. McMenamin's Grill
    5. TOUSA

Benefits

The panel will review these and other key questions:

  • What factors are emerging as critical in courts' analysis of whether an LBO is avoidable in bankruptcy?
  • What LBO structures are being implicated by creditor challenges?
  • What are the limitations on protections for shareholders in LBO deals?
  • What steps can sellers and PE firms take to mitigate avoidance risks?

Following the speaker presentations, you'll have an opportunity to get answers to your specific questions during the interactive Q&A.

Faculty

Lisa S. Bonsall
Lisa S. Bonsall

Partner
McCarter & English

She practices in diverse areas of litigation, focusing on commercial litigation and bankruptcy. She represents...  |  Read More

Henry P. Baer
Henry P. Baer

Partner
Finn Dixon & Herling

His practice focuses on complex financial transactions involving distressed assets. He has significant experience...  |  Read More

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