Subordination and Recharacterization of Claims in Bankruptcy: Avoiding Pitfalls for Lenders, Creditors, and PE Sponsors
Navigating Circuit Split in Bringing or Defending Bankruptcy Preference Actions
Recording of a 90-minute CLE video webinar with Q&A
This CLE course 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 their priority status against junior and unsecured creditors or borrowers facing insolvency or bankruptcy.
Outline
- Overview of subordination and recharacterization in bankruptcy
- Equitable subordination
- Subordination of claims based on purchase or sale of securities
- Recharacterization
- Recent case law
- Litigation considerations
- Minimizing attacks on the claim
- Secured lenders
- Underwriting
- Collateral review
- PE sponsors
- Anticipating liquidity problems
- Internal governance procedures
- Arm's length transactions
- Management rights or other control of business operations
- Creditors
- Non-statutory insiders
- Claimants with securities purchase/sale-related claims
- Secured lenders
Benefits
The panel will review these and other key issues:
- How have the courts defined "inequitable conduct" to justify equitable subordination?
- How do courts analyze potential subordination of claims related to the purchase or sale of securities?
- What factors do the courts use to distinguish a loan transaction from equity investment to justify recharacterization?
- How can PE sponsors loaning money to their portfolio companies protect themselves from attack?
Faculty
Gary M. Kaplan
Partner, Chair Restructuring, Insolvency and Creditors Rights Practice Group
Farella Braun + Martel
Mr. Kaplan has decades of experience representing debtors, creditors, creditors' committees, trustees, and... | Read More
Mr. Kaplan has decades of experience representing debtors, creditors, creditors' committees, trustees, and receivers in a wide range of bankruptcy and nonbankruptcy matters. His practice includes both out of court and Chapter 11 restructurings and advising clients regarding pre- and post-bankruptcy strategy, debt collection, judgment enforcement, and provisional remedies. Mr. Kaplla represents lenders and borrowers in a wide range of financing transactions, including debtor-in-possession financing, as well as lease and guaranty matters. He also has extensive litigation experience in bankruptcy and non-bankruptcy courts, at trial and appellate levels, including in the U.S. Supreme Court. Mr. Kaplan counsels companies and individuals experiencing financial and operational challenges in myriad industries. He helps clients restructure their finances, build and negotiate sustainable workout plans with creditors, and develops other creative solutions to avoid bankruptcy, including refinancings, divestitures, joint ventures, and licensing deals. Mr. Kaplan also represents both secured and unsecured creditors, creditors’ committees, landlords, and equity holders in creative recovery solutions in and outside of bankruptcy. He has proved adept at protecting landlord’s rights in retailer bankruptcy cases nationwide through negotiation and litigation when necessary. He has extensive experience in insolvency-related litigation, including preference and fraudulent transfer claims, as well as defending guarantors, owners, directors and officers.
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