Tronox v. Kerr-McGee: Game Changing Ruling on Fraudulent Transfer and Spin-Offs to Shed Legacy Liabilities

Navigating Complex Issues of Fraudulent Conveyance, Statute of Limitations, Stern v. Marshall Consent and Damages

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

Conducted on Wednesday, February 12, 2014

Recorded event now available

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Program Materials

This CLE webinar will provide bankruptcy counsel with an in depth review of the key issues in the Tronox ruling. The panel will discuss the application of the laws of fraudulent conveyance (state and Bankruptcy Code) to corporate spin-offs designed to shed legacy liabilities, the applicable statute of limitations, the Stern v. Marshall issue of consent, and the intricacies of damage calculations.

Description

In a ground-breaking environmental fraudulent transfer case, a New York Bankruptcy court ruled in favor of the Tronox Inc. litigation trust. Damages between $5.1 and $14.1 billion are anticipated. This ruling has a considerable impact on companies with substantial liabilities that attempt to restructure outside of bankruptcy.

The court held that Kerr-McGee’s transfer of valuable oil and gas assets to a new company and spin-off of the legacy liabilities to newly-formed Tronox constituted fraudulent transfer and that the transaction, which left Tronox insolvent, was not made for reasonably equivalent value.   

The opinion also discusses the Stern v. Marshall issue of consent to the bankruptcy’s court’s jurisdiction, holding that it had authority to enter final judgment because Kerr-McGee filed proofs of claims against the debtors for not honoring terms of the spin-off, including failure defend environmental litigation against Tronox.  

Listen as our authoritative panel of bankruptcy practitioners explains the history and key issues in the Tronox ruling. The panel will discuss the court’s application of the laws of fraudulent conveyance to corporate spin-offs designed to shed legacy liabilities, the applicable statute of limitations, consent to the bankruptcy court’s jurisdiction to enter final judgment, and the intricacies of damage calculations.

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Outline

  1. History and overview of Tronox v. Kerr-McGee
  2. Fraudulent transfer analysis
  3. State vs. Bankruptcy Code fraudulent conveyance laws and statute of limitations
  4. Stern v. Marshall issue of consent
  5. Damages

Benefits

The panel will review these and other key questions:

  • What facts and circumstances led the court to conclude that the eventual spin-off of Tronox was both an actual and constructive fraudulent transfer?
  • What reasonably equivalent value arguments put forth by Kerr-McGee were rejected by the court?
  • What statute of limitations issues arose under the state UFTA and Bankruptcy Code fraudulent transfer provisions?
  • How did the court rule on the Stern v. Marshall issue of consent when a creditor files a proof of claim?
  • What are the complex damages issues yet to be determined?

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

Faculty

Michael E. Comerford
Michael E. Comerford
Of Counsel
Milbank Tweed Hadley & McCloy

Mr. Comerford is a member of the firm’s Financial Restructuring Group and has extensive experience in...  |  Read More

Cindy Chen Delano
Cindy Chen Delano
Vice President, Associate General Counsel
AIG Investments

Ms. Delano is an attorney in the legal group of AIG’s asset investment business, which invests assets on behalf...  |  Read More

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