Category Archives: Distressed M&A

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GM Judge Nuances His Earlier Rulings and Sets Out Permissible Ignition Switch Lawsuits

At a hearing in late August, Judge Robert Gerber expressed his annoyance with both sides in the ongoing battle to determine whether General Motors LLC (“New GM”), the entity formed in 2009 to acquire the assets of General Motors Corporation (“Old GM”), is shielded from lawsuits based on ignition switch defects in cars manufactured prior … Continue Reading

Is GM Shielded From Ignition Switch Defect Liability? Hearing Highlights Thorny Due Process and Bankruptcy Issues

Judge Robert Gerber will be stepping down at the end of this year, ending a storied judicial career highlighted by his oversight of the 2009 chapter 11 case of General Motors Corporation (“Old GM”). In one of the most frenetic bankruptcy cases of all time, Judge Gerber signed an order (the “Sale Order”) approved the … Continue Reading

No Easy Road – GM Ignition Switch Litigation Raises Difficult Bankruptcy-Related Questions

General Motors LLC (“New GM”) came into being in the summer of 2009, when it acquired substantially all of the assets of General Motors Corporation (“Old GM”) in a sale undertaken pursuant to section 363 of the Bankruptcy Code.  The July 2009 Sale Order approved by U.S. Bankruptcy Judge Robert Gerber transferred the assets to … Continue Reading

None Too Appealing – District Court Turns Aside Free Lance-Star Publishing Credit Bid Lender

A recent ruling in the Chapter 11 case of Free Lance-Star Publishing limited the credit bidding rights of a secured creditor.  The ruling has called into question the ability of the holder of secured debt to utilize such debt to acquire companies on a going concern basis in bankruptcy cases, particularly in instances where the … Continue Reading

Loan to Moan? Judge Limits Right to Credit Bid in Chapter 11 Case of Free Lance-Star Publishing Co.

A few months ago, a ruling in the Chapter 11 case of Fisker Automotive narrowed a secured creditor’s right to credit bid its debt in connection with a sale of the debtor’s assets.  The decision surprised many observers and resurrected uncertainty about a debtor’s ability to limit a secured lender’s credit bidding rights (a dispute … Continue Reading

Fisker Automotive Chapter 11 Case: a Two-Headed Stalking Horse and a New Credit Bidding Controversy

Fisker Automotive’s chapter 11 case began in what has become a depressingly familiar fashion – a fast-tracked sale to a secured lender.  However, two rulings by Judge Kevin Gross of the U.S. Bankruptcy Court for the District of Delaware have made this a fascinating case to follow.  Judge Gross has directed  Fisker to proceed with … Continue Reading

DeX Games – SuperMedia and Dex One File Simultaneous Chapter 11 Cases to Effect Merger

Distressed m&a is the “new normal” in Chapter 11 cases, as noted here and elsewhere. Two large media marketing and advertising companies, SuperMedia and Dex One, took the “new normal” to new extremes last week by filing simultaneous and coordinated “prepackaged” Chapter 11 cases in order to complete a merger of their businesses.  Both SuperMedia and … Continue Reading

Too Cool for School Specialty – Alternative DIP Financing Allows Educational Company to Avoid Immediate Sale

The School Specialty chapter 11 case began in what has become all too typical fashion. The company, overleveraged and short of cash, had no choice but to accept a lifeline extended by its second lien secured lender, a private investment fund. The terms of the debtor in possession (“DIP”) financing required School Specialty to seek an immediate … Continue Reading

Bip . . . Bip . . . Bip . . . “Pong” Creator Atari Files for Chapter 11

Atari, Inc., the creator of the primordial video game “Pong”, filed for Chapter 11 yesterday in the U.S. Bankruptcy Court for the Southern District of New York. Its parent company, Atari SA, simultaneously sought bankruptcy protection in France. The moves were precipitated by a cessation of funding from Atari SA’s largest shareholder and primary lender. According to issued … Continue Reading

I Never Liked Twinkies

Sno-Balls, on the other hand, and virtually every type of Drakes confection – Yodels, Yankee Doodles, Devil Dogs – I enjoyed to excess at every opportunity.  Fortunately, none of these famous snacks are going away, feverish news reports of Twinkie hoarding and e-Bay price gouging notwithstanding. Hostess Brands in its current corporate form is headed for liquidation, … Continue Reading

Blink and You Missed It – Emergency Sale of Digital Domain Media Approved

Judge Brendan Shannon of the U.S. Bankruptcy Court for the District of Delaware last week approved the sale of Digital Domain Media Group, the special effects company founded by James Cameron, following one of the fastest distressed m&a transactions ever in a Chapter 11 case. The auction, held only 10 days after the petition date, nevertheless … Continue Reading

Chapter 11 Once Again Safe for Undersecured Lenders – Supreme Court Affirms Right to Credit Bid in RadLax

  The U.S. Supreme Court today in Radlax Gateway Hotel, LLC, et al. v. Amalgamated Bank unanimously upheld the right of secured creditors to credit bid their debt upon a sale of their collateral pursuant to a nonconsensual chapter 11 plan of reorganization.  As described in numerous prior posts on this site, the ruling resolves … Continue Reading

Supreme Court Indubitably Grapples With Credit Bidding

  The Supreme Court heard arguments yesterday in RadLAX Gateway Hotel over whether the Bankruptcy Code permits a debtor in a chapter 11 case to sell encumbered assets without providing its secured lenders an opportunity to credit bid their debt.  As previously described on this site, a circuit split arose last year, when the Seventh … Continue Reading

Does a Single “Or” Excommunicate Congressional Intent From the Bankruptcy Code? Supreme Court to Resolve Circuit Split on Credit Bidding

The U.S. Supreme Court will rule this term in RadLAX Gateway Hotel Inc. v. Amalgamated Bank on whether the Bankruptcy Code permits a debtor in a chapter 11 case to sell encumbered assets without providing the secured lender an opportunity to credit bid its debt. Determination of this question will require the Court essentially to choose … Continue Reading

Los Angeles Dodgers’ Chapter 11 Case: No Replay of Texas Rangers’ Drama

A World Series as exciting as any in memory ended two weeks ago. Notwithstanding the end of the season, the Los Angeles Dodgers’ chapter 11 case offered the promise of more baseball-related thrills. Dodger’s owner Frank McCourt and Major League Baseball (“MLB”) Commissioner Bud Selig appeared headed towards an epic courtroom showdown that promised to rival the … Continue Reading

So This Is Why Judges Bother to Write Dissenting Opinions — Seventh Circuit Decision on Credit Bidding Vindicates Judge Ambro’s Philadelphia Newspapers Dissent

Critics of last year’s decision on credit bidding by the Third Circuit Court of Appeals in the Philadelphia Newspapers chapter 11 case welcomed the Seventh Circuit’s recent unanimous opinion in River Road Hotel Partners LLC. The Seventh Circuit expressly adopted the Judge Tom Ambro’s cogent analysis in his Philadelphia Newspapers dissent.    In River Road, the debtors … Continue Reading

Credit Bidding After Philadelphia Newspapers: Dissent 1, Majority 0

Bankruptcy lawyers who are regularly involved in distressed m&a deals have been wondering for the past few months about the potential fallout from Philadelphia Newspapers. In that case, as previously described on this site, the Third Circuit Court of Appeals upheld the debtor’s efforts to deny its secured lenders the right to credit bid in connection … Continue Reading

Sale of Liverpool Football Club – The Ox Getting Gored Is On the Other Foot

Tom Hicks spent months trying to push through a sale of the Texas Rangers over the strong objections of his bank lenders, who believed that the proposed deal substantially undervalued the team. The result was a nasty, brutish (though relatively short) slog through chapter 11 for Texas Rangers Baseball Partners.  Now, Liverpool Football Club, also substantially … Continue Reading

Texas Rangers Chapter 11 Saga – Lessons Learned?

The Texas Rangers Chapter 11 case is finally winding down, following several weeks of nearly non-stop legal wrangling and high stakes drama. Rangers Baseball Express, LLC (“RBE”), a group fronted by legendary pitcher Nolan Ryan, emerged as the winner following a lengthy and raucous auction.  There are numerous lessons which can be drawn from this fascinating … Continue Reading
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