- Preliminary Assessment of a Prompt, Efficient Debt Restructure
- Cross-Border Bankruptcy Cases, including foreign companies filing Chapter 11 cases in Houston
- Government Debt Restructure, including cities, states and nations
Preliminary Assessment of a Prompt, Efficient Debt Restructure
As described on my Home Page and in Preliminary Assessment of a Prompt, Efficient Debt Restructure, I can help responsible officers learn major restructure issues to prepare them to interview and hire excellent legal and financial professionals to work with them to lead a debt restructure.
We will begin a Preliminary Assessment by using a Template to organize information about (i) debt obligations, (ii) asset values and (iii) cash flows. We will review fiduciary duty concepts and debt restructure principles, including good faith, best interests of creditors, fair and equitable and feasible. Based on these things, we can discuss what general kinds of debt restructure plans can be done.
Some Issues We Will Discuss During a Preliminary Assessment
- Adequate protection for a secured creditor’s interest in its cash collateral during a Chapter 11 case (often involving 13-week cash flow projections, done on a cash basis) (see What the US Supreme Court has said about Adequate Protection)
- Fair and equitable treatment in a Chapter 11 plan of reorganization at the end of a case (often involving 3-year cash flow projections, sometimes based on improved business performance, done on a GAAP basis, and valuation of them) (see What the US Supreme Court has said about Fair and Equitable)
- Fiduciary duty in the zone of insolvency (see Who do you Serve? In Delaware you never lose (i) your duty to shareholders nor (ii) your duty to act reasonably to maximize value)
- Moving a Chapter 11 case promptly and efficiently (see Congress Codified Katchen and the Fifth Circuit has Followed It)
- Keeping control of your case by avoiding de facto plans when borrowing money or selling assets (see De Facto Plans, Texas Procedures for Complex Cases, and Releases)
- Obtaining release and exculpation for debtor fiduciaries and creditor plan supporters (see Talen Energy: Settlements, Releases, Exculpations and Gatekeeper Protections Post Highland Capital)
Result of a Preliminary Assessment
After reviewing the facts organized using a Template, and understanding debt restructure concepts in greater detail through these discussions, company officers can develop views about the kinds of restructure plans that could be done with an enterprise value based on existing cash flows, the possibility of improving those cash flows, and the prospects for existing shareholders. This will prepare them to (i) interview excellent restructure lawyers, financial advisors and investment bankers, (ii) assess their approaches, and (iii) choose who they think best to help them lead a debt restructure.
Cross-Border Bankruptcy
For over 10 years, I have taught a class about Foreign Companies Using Chapter 11, which is sponsored by the American College of Bankruptcy and broadcast to over 10 law schools.
I was lead trial counsel in two major cross-border cases in Houston:
- In re Xacur(involuntary bankruptcy against Mexican citizens)
- In re Yukos Oil(Chapter 11 case for a major Russian oil company)
I was also lead trial counsel in a Chapter 15 case for Yukos in New York. There, a trustee from Yukos’ subsequent Russian bankruptcy case tried to use the New York bankruptcy court to control the sale of a refinery in Lithuania. We persuaded the New York court to require that Yukos’ management be permitted to present a reorganization plan in the Russian bankruptcy case. Russian authorities ignored that plan that would have preserved billions for Yukos’ shareholders and liquidated anyway, subjecting Russia to substantial liability in a later arbitration with Yukos’ shareholders.
See also:
For more information, see Resources.
Government Debt Restructure
I can help governments at all levels (municipal, state and national) restructure their debt and find ways to adjudicate whether their proposed restructure plans are fair and equitable. I have published numerous articles about government debt restructure and led a Chapter 9 case that was completed successfully in four months.
Government Debt Restructure Principles describes how to deal with government insolvency by proposing a restructure plan based on reasonable austerity and reasonable use of taxation so that creditors are paid all they can reasonably expect under the circumstances, but more than they would receive by exercising their legal remedies against the government. To use terms of art, this would be a debt restructuring plan that is “fair and equitable” and “in the best interests of creditors.”
Government Debt Restructure Principles describes how it might be necessary to use a payment moratorium to encourage agreement to a fair and equitable restructure plan. Additionally, it describes how a government can improvise a way to have a trial about whether its plan is fair and equitable in an equity receivership or arbitration, even if it does not have a pre-authorized right to such a trial in a Chapter 9 case.
Leading a Government to Solvency describes how to employ financial experts to do a study of reasonable austerity and reasonable use of taxation to determine how much of its debt a government entity can reasonably afford to pay, and how much creditors would likely obtain using their non-bankruptcy remedies, to be ready to negotiate about these issues, and to try them promptly, if necessary.
See also:
For more information about Government Debt Restructure, click here
