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
A live 90-minute CLE video webinar with interactive 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
Ira L. Herman
Partner
Blank Rome
Mr. Herman concentrates his practice on distressed public debt issues, insolvency matters involving upstream and... | Read More
Mr. Herman concentrates his practice on distressed public debt issues, insolvency matters involving upstream and midstream oil and gas companies, and distressed M&A, in addition to traditional bankruptcy and insolvency matters. He regularly advises lenders on the management of bankruptcy risk in their transactions; indenture trustees regarding defaulted public debt issues; and lenders regarding restructuring and bankruptcy. Additionally, Mr. Herman provides services on the debtors’ side, counseling financially distressed entities and their management on restructuring challenges pertaining to corporate governance issues.
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Gary M. Kaplan
Partner
Farella Braun + Martel
Mr. Kaplan represents debtors, secured and unsecured creditors, creditors' committees and trustees in a wide... | Read More
Mr. Kaplan represents debtors, secured and unsecured creditors, creditors' committees and trustees in a wide range of bankruptcy and non-bankruptcy matters. His practice includes both out of court and Chapter 11 restructurings, including advising clients regarding pre- and post-bankruptcy strategy, debt collection, judgment enforcement and provisional remedies. He also has extensive litigation experience.
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