Tag Archives: Bankruptcy

Make Whole Provisions in Bankruptcy

Loan agreements and bond indentures often contain “make-whole” provisions, which provide yield protection to lenders and investors in the event of a repayment prior to maturity. They accomplish this by requiring the borrower to pay a premium for pre-payment of a loan. This allows lenders to lock-in a guaranteed rate of return when they agree … Continue Reading

What’s in a Name? Amendments to the Uniform Fraudulent Transfer Act

On July 16, 2014, the Uniform Law Commission (the “Commission”) approved a series of discrete amendments to the Uniform Fraudulent Transfer Act (the “UFTA”) and renamed it the Uniform Voidable Transactions Act (the “UVTA”). The UVTA is intended to address inconsistency in the courts, better harmonize with the Bankruptcy Code and the Uniform Commercial Code … Continue Reading

Are Those Bankruptcy Waivers in Your Intercreditor Agreements Effective?

This post was written by Michael J. Venditto, a partner in Reed Smith’s Commercial Restructuring & Bankruptcy department.  A special thanks to Mike for contributing to the lending lawyer blog!  If you have negotiated an intercreditor agreement, you are familiar with the lengthy bankruptcy waivers typically drafted by counsel for first-lien lenders.  Intended to take effect … Continue Reading

Commercial Restructuring and Bankruptcy Newsletter: Helpful Information for Lenders!

This post was written by Abbey Mansfield. Reed Smith’s Commercial Restructuring and Bankruptcy (CRAB) attorneys recently released their December 2013 newsletter covering issues in the restructuring and bankruptcy field, many of which are relevant to lenders (with one in particular noted  below).  The full newsletter is available here. Included in the newsletter are the following … Continue Reading

The TOUSA Two-Step: Who Gets to Dance in Bankruptcy?

We've reported on the TOUSA case before (the first step of the two-step). This time, on appeal, the outcome is much less attractive to lenders. It seems that helping a company to avoid bankruptcy temporarily might not be enough "value" to merit requiring the company and its subsidiaries to grant new liens. Have we gone one step forward and two steps back?… Continue Reading

The TOUSA Case – Not a Fraudulent Conveyance

If a subsidiary of the borrower guarantees your loan (and/or provides a lien or other support), do you have to show that the subsidiary received some of the proceeds of the loan in order to demonstrate that the subsidiary received "reasonably equivalent value" in the deal -- and that the deal wasn't a fraudulent conveyance? The TOUSA case give us an answer to this question.… Continue Reading

What is a Fraudulent Conveyance?

A fraudulent conveyance, despite its name, doesn't necessarily involve "fraud," and it certainly doesn't involve driving goods across the state in a wagon with a team of horses. OK, now that we have that out of the way . . . With all the news last week about the TOUSA case (reversing a prior decision that said $420 million paid to lenders was a fraudulent conveyance), I thought I'd first take a moment to talk about fraudulent conveyances more generally.… Continue Reading

Can We Credit Bid Or Not?

Credit bidding has become a really hot issue recently.   For those of us who don’t normally work on bankruptcy matters, the right to credit bid is an important right that secured lenders usually have in a bankruptcy proceeding.  If you’re the senior secured lender and you want to buy the company’s assets in a bankruptcy sale, you can show up at the … Continue Reading

Second Liens Really are Second

With the increase in corporate bankruptcy filings over the past year, there have been some interesting bankruptcy court decisions that affect those of us on the front end in corporate lending. One recent case took up the question of whether a second lien is truly second -- and whether it is safe to expect the terms of your intercreditor agreement to be enforced.… Continue Reading

What if an Equity Sponsor is also a Lender in your Bank Group?

In today's challenging economic climate, private equity sponsors are trying to figure out how to fill funding gaps in acquisition financings -- and how to provide additional capital to their troubled portfolio companies. In lieu of providing additional equity, some sponsors are requesting the ability to participate as a lender in the senior debt facilities of the portfolio company. If the lenders decide to allow the sponsor to become a lender in their debt facilities, what steps should they take to best protect themselves, given the different hats this new lender will be wearing?… Continue Reading

Protecting LBO Payments Under the Bankruptcy Code

When closing a leveraged buyout, if the buyer makes its payments to the company’s shareholders through a financial institution – even in an acquisition of a privately held company – those payments may be protected from being clawed back in a bankruptcy. The Quality Stores Case A recent federal case involving Quality Stores Inc. was decided … Continue Reading