Bankruptcy + Restructuring. Year-End Review

Transcription

1 Bankruptcy + Restructuring 2011 Year-End Review

2 In This Issue A Year in Review 3 Major Representations by Industry 4 Industry Awards and Recognition 8 Selected Publications + Client Alerts 11 Contacts 12 2

3 A Year in Review It s been a whirlwind year for MoFo s Bankruptcy & Restructuring Group. As befits our practice, we continued to develop and deliver innovative strategies for our clients across an array of industries, collaborating to minimize risk and enhance value. By any marker, 2011 was our most successful year to date. The first half of 2011 saw us in a familiar role serving as counsel for the official committee of unsecured creditors in a spate of high profile Chapter 11 cases: Mesa Air Group, Inc., Innkeepers USA Trust, and Caribbean Petroleum. All were confirmed and produced significant value for unsecured creditors. This type of work is one reason The American Lawyer, in its 2011 Corporate Scorecard, called us the leading creditors committee team in the country. The second half of this year brought equally impressive results for our unsecured creditor committee clients, including the resolution of highly contested issues in the Ambac Financial Group Inc. Chapter 11 case, which resulted in a consensual plan currently scheduled for confirmation in early Our work on the Los Angeles Dodgers and FGIC Chapter 11 bankruptcy cases, where we represent the official committees of unsecured creditors, also continue to keep us busy. Most recently, we began serving as lead counsel to the Chapter 11 trustee for MF Global, Louis Freeh. MF Global was the largest bankruptcy filing of 2011 and the eighth largest in U.S. history. Our roles in major cases are just one measure of our success. We also guided clients to a string of impressive successes that included: The successful defense of credit bidding rights in the Seventh Circuit; A favorable ruling against a foreign bankruptcy trustee on IP ownership issues; A successful involuntary filing on behalf of a secured lender group resulting in significant settlement recoveries through a confirmed reorganization plan; and A ground-breaking decision defending the constitutionality of Rhode Island s Restructuring Act, which has been lauded by the insurance sector as providing unique opportunities for companies in run-off. We are gratified that, largely thanks to the kind words of our clients, our group received significant recognition in 2011 for the cutting-edge nature of our work. This included a cover feature in The American Lawyer lauding our team s innovative strategy to save Iceland from financial Armageddon, and a spot on the Financial Times Top 20 list of the most innovative U.S. law firms in We pride ourselves on a breadth of expertise that goes far beyond that of other big firms, including our facility with the issues affecting the banking, derivatives, secured lending, insurance, environmental, and IP sectors. It is this knowledge, combined with our fierce devotion to clients, our fresh and collaborative approach to thorny problems, and our can-do attitude, that makes us unique. We appreciate the opportunity to work together in 2011 and look forward to a great Gary S. Lee and Larren M. Nashelsky Bankruptcy + Restructuring Group Co-Chairs 3

4 Major Representations by Industry airlines In re Mesa Air Group, Inc. unsecured creditors of Mesa Air Group in its Chapter 11 bankruptcy, one of the largest national cases measured by debt. MoFo won the Corporate Turnaround Deal of the Year award at the 2011 Turnaround Atlas Awards for its work on this case. size distressed filed in real estate In re South Edge, LLC (Bankr. D. Nev.) Representation of JPMorgan Chase Bank, N.A. as administrative agent for a syndicate of lenders, which provided approximately $585 million in secured financing for a planned multibillion-dollar real estate project in Las Vegas. MoFo filed and successfully defended the involuntary Chapter 11 bankruptcy petition, alongside a motion to appoint a Chapter 11 trustee, against South Edge, LLC, the developer of the 2,000- acre master-planned community, and then negotiated, prepared, confirmed, and implemented a reorganization plan, together with a majority of the homebuilder equityholders, which provided the lending syndicate with a par-plus recovery of $335 million. In re Fairfield Residential LLC (Bankr. D. Del.) Representation unsecured creditors of Fairfield Residential LLC in its Chapter 11 bankruptcy. MoFo continues to represent the entity that received all of the debtor s postbankruptcy assets overseeing the management and divestiture of more than 100 multifamily projects nationwide. In re River Road Hotel Partners LLC and In re RadLAX Gateway Hotel LLC (Bankr. N.D. Ill./7th Cir.) Representation of Amalgamated Bank (as trustee for itself) and U.S. Bank National Association as secured lenders in two separate but related Chapter 11 bankruptcy proceedings, where the debtors operate the Radisson Hotel at the Los Angeles International Airport and the InterContinental Hotel Chicago O Hare. MoFo successfully defended the debtors unusual direct appeal to the Seventh Circuit Court of Appeals of the Bankruptcy Court s ruling that the debtors could not confirm a plan of reorganization selling the hotels free and clear of liens but denying the secured creditor clients the right to credit bid at such a sale. The Seventh Circuit s ruling created a split between the Seventh Circuit and the Third Circuit s Philadelphia Newspapers opinion on the issue. The day after the Seventh Circuit affirmed the credit bidding decision, the bankruptcy court confirmed the secured creditor client s plan of reorganization in the River Road cases under which ownership of the hotel and related assets was transferred to the creditors control, thus effectively ending the River Road cases. The Supreme Court recently granted the RadLAX debtor s petition for writ of certiorari to review the Seventh Circuit s decision. In re Innkeepers USA Trust unsecured creditors in the Chapter 11 bankruptcy of Innkeepers USA Trust. This is one of the largest national cases, by debt size, filed in 2010 with $1.29 billion in prepetition secured debt, which culminated with the sale of 64 of Innkeepers 4

5 continued Major Representations By Industry hotels to affiliates of Cerberus Capital Management for $1.02 billion. Unsecured creditors are estimated to recover approximately 80 90% on their allowed claims, with many to be paid in full. In re Extended Stay Inc. of a creditor in Extended Stay Inc. s Chapter 11 bankruptcy. Extended Stay is the largest bankruptcy filing in the history of the hospitality industry with more than $7 billion in debt. Our client is the largest creditor, with an exposure in excess of $1 billion dollars. In re General Growth Properties, Inc. (Bankr. D. Del.) Representation of Eurohypo AG s New York Branch and a group of lenders that has more than $2.6 billion of exposure to GGP. Soon after confirmation of GGP s reorganization plan, MoFo worked with the agent to defeat GGP s objection to the agent s claim for default interest on the loan, and obtained an order from the bankruptcy court awarding the agent, for the benefit of the lenders, over $89 million in contract-rate default interest. MoFo is currently defending the agent in GGP s appeal of the bankruptcy court s order. energy and natural resources In re Caribbean Petroleum Corp. (Bankr. D. Del.) Representation unsecured creditors in the Chapter 11 case of Caribbean Petroleum Corp., one of the primary importers and distributors of petroleum products in Puerto Rico. The case involves key issues relating to environmental liabilities in bankruptcy, following catastrophic explosions at the debtors petroleum facilities. Toshiba Corporation Representation of Toshiba in restructurings of power and infrastructure project interests, including debt and equity investments in major projects in the United States. financial services In re MF Global Holdings Ltd (Bankr. S.D.N.Y.) Former FBI Director Louis J. Freeh, who was appointed as Chapter 11 trustee for MF Global Holdings, Ltd. and MF Global Finance USA Inc, selected MoFo as his counsel. MF Global was the largest bankruptcy filing of 2011 and the eighth-largest in U.S. history. In re Landsbanki Islands hf (Bankr. S.D.N.Y.) Representation of Landsbanki Islands hf, one of the three largest banks in Iceland, in its Chapter 15 cases and assistance with its multijurisdictional restructuring efforts in connection with Icelandic reorganization proceedings. We are advising the bank on the negotiations over the compensation instruments to be provided to the bank for the nationalization of assets, the liquidation of its remaining assets, and the global resolution of crossborder claims and litigation. MoFo was instrumental in rewriting Iceland s insolvency law and helping avoid a massive economic crisis in Iceland. In its October 2011 issue, the American Lawyer referred to our work on the case as Morrison & Foerster s Bankruptcy practice s finest hour. In re Lehman Brothers Holding, Inc. of Lehman Brothers Japan (LBJ) as a creditor in the U.S. bankruptcy court restructuring 5

6 continued Major Representations by Industry of Lehman Brothers Holdings and the Lehman Brothers proceedings administered under the Securities Investor Protection Act. LBJ asserted claims against the U.S. estates in excess of $1 billion for purposes of funding distributions to creditors in its own Japanese administrative proceedings. Madoff Proceedings Representation of the liquidators of several hedge funds that invested directly or indirectly in Bernard L. Madoff Investment Securities, LLC in proceedings in the United States, Cayman, British Virgin Islands, and Europe. Asian Madoff Creditor Representations Representation of Bank SinoPac, a major Taiwanese bank, and ad hoc creditors committees in the billion-dollar frauds committed by Danny Pang, the Asian Madoff, and his various affiliates. insurance In re Ambac Financial Group, Inc. unsecured creditors of Ambac Financial Group, Inc. in its $1.69 billion Chapter 11 bankruptcy, the fifth largest financial services bankruptcy to date. MoFo actively negotiated with the debtor and the Office of the Insurance Commissioner for the State of Wisconsin, among other parties, to resolve complex issues and reach an agreement that lead to the filing of a consensual plan of reorganization currently scheduled for confirmation in early MoFo has also engaged with the debtor and the Internal Revenue Service regarding the potential settlement of a $700 million tax dispute. In re FGIC Corp. unsecured creditors of FGIC Corporation in its Chapter 11 bankruptcy. FGIC had guaranteed more than $300 billion of municipal and structured finance debt before the credit crisis. In re GTE Reinsurance Company (Providence Sup. Ct.) Representation of the insurance division of the State of Rhode Island s Department of Business Regulation in the first-ever proposed discharge and liquidation of the obligations of a solvent insurer in the U.S. MoFo s appellate litigation team successfully defended the constitutionality of a unique Rhode Island statute that allows a solvent insurance company that has entered into an arrangement to bring finality to its obligation with creditors. Partner Gary Lee was honored as Person of the Year by the Association of Insurance and Reinsurance Run-Off Companies in 2011 for his work on this matter. municipalities In re Los Osos Community Services District (Bankr. C.D. Cal.) Representation of two of the largest general unsecured creditors in Los Osos Community Services District s Chapter 9 bankruptcy, including on a variety of plan confirmation issues involving California laws and federal bankruptcy law. sports, media and entertainment In re Los Angeles Dodgers LLC (Bankr. D. Del.) Representation unsecured creditors in the Los 6

7 continued Major Representations by Industry Angeles Dodgers Chapter 11 bankruptcy proceeding. This engagement presents unique challenges given differing initial views between the debtors and Major League Baseball (MLB) regarding how the case should proceed. MLB sought a quick sale of the team, whereas the debtors sought to promptly sell their media rights to create liquidity. Ultimately, the debtors and MLB agreed on a process to sell the team that would permit the debtors to market their media rights as a means of maximizing estate value during the team sale process. The debtors and Fox Sports are now locked in a legal battle to decide whether the debtors can market their media rights in light of exclusive negotiation rights contained in their current agreement with Fox. In re TMP Directional Marketing LLC (Bankr. D. Del.) Representation of the ad hoc committee of unsecured creditors of TMP Directional Marketing in its liquidating prepackaged Chapter 11 bankruptcy. MoFo coordinated and facilitated a unique and novel solution: a prepackaged bankruptcy secured by the vote of trade creditors. With over 99% in amount and 95% in number voting for the plan, the voting creditors overwhelmingly supported the plan. The committee s members have $112 million in unsecured claims against the advertising agency, comprising approximately 85% of the company s outstanding debt. TMP is set to confirm its trade debt prepack within two months of filing for Chapter 11 protection, with returns to the trade creditors soon thereafter. technology In re think3 Inc. (Bankr. W.D. Tex.) Representation of Versata FZ-LLC, as exclusive licensee of key computer-aided design software developed by think3 Inc., in a dispute with an Italian bankruptcy trustee. After Italian creditors of think3 forced an Italian branch of the company into bankruptcy in Italy, the bankruptcy trustee appointed to oversee the case attempted to seize control of think3 worldwide and to terminate Versata s license. think3 subsequently filed for bankruptcy in the U.S. under Chapter 11 of the U.S. Bankruptcy Code in Texas in response to the trustee s efforts. A full trial was conducted in the U.S. Bankruptcy Court over the license and other issues, resulting in a final ruling that Versata was the exclusive owner of think3 s IP. The court also denied the Italian trustee s request for recognition of the Italian bankruptcy proceedings under Chapter 15. In re Qimonda AG (Bankr. E.D. Va.) Lead U.S. counsel to Qimonda AG, a semiconductor company that is in insolvency proceedings in Germany which have been recognized in the U.S. under Chapter 15 of the U.S. Bankruptcy Code. MoFo successfully negotiated a settlement between Qimonda AG and its U.S. subsidiaries for the ownsership of certain assets and more than $1 billion in intercompany claims. In re DBSD North America Inc. of ICO Global in the restructuring and Chapter 11 bankruptcy of its subsidiary DBSD North America and in the $1.5 billion sale of DBSD to DISH Network. 7

8 Industry Awards and Recognition Financial Times Most Innovative Law Firm The FT featured Morrison & Foerster in its ranking of the Top 20 most innovative U.S. law firms, spearheaded by the cutting-edge solutions devised by our Bankruptcy & Restructuring and Bank Regulatory Groups on the AmericanWest transaction. U.S. News/Best Lawyers Best Law Firms U.S. News and Best Lawyers selected Morrison & Foerster s Bankruptcy & Restructuring Group among the leading national firms for Bankruptcy/Insolvency and Reorganization Law in their second annual ranking of U.S. law firms. MoFo s California bankruptcy practice also earned Top Tier honors in this category. The American Lawyer #1 on the Corporate Scorecard 2011 The American Lawyer named Morrison & Foerster the top firm for creditor-side bankruptcy representations on its annual Corporate Scorecard. Association of Insurance and Reinsurance Run- Off Companies Man of the Year 2011 Morrison & Foerster partner Gary Lee was honored as Person of the Year by the Association of Insurance and Reinsurance Run-Off Companies in 2011 for his work on the GTE Reinsurance Company Ltd. closure. The Legal 500 United States Guide to Law Firms 2011 Morrison & Foerster s Bankruptcy & Restructuring Group was recognized by The Legal 500 in its 2011 directory as one of the nation s best. Clients described the growing team as providing creative, astute, constructive and proactive advice to a broad array of stakeholders including corporations, banks, and hedge funds. 8

9 continued Industry Awards and Recognition International Financial Law Review IFLR Americas Awards 2011 Nominee Morrison & Foerster s Bankruptcy & Restructuring Group was nominated for Restructuring Team of the Year for its work on the AmericanWest transaction. Chambers USA 2011 Guide to America s Leading Law Firms Chambers USA listed Morrison & Foerster partner Brett Miller among New York s leading Bankruptcy & Restructuring attorneys in its 2011 guide. Turnaround Atlas Awards Deal of the Year MoFo won the Corporate Turnaround Deal of the Year award ($1+ billion deal category) at the 2011 Turnaround Atlas Awards for its work representing the official committee of unsecured creditors in the Mesa Air Group case. The M&A Advisor The M&A Advisor Award Nominee MoFo has been nominated for the 2011 The M&A Advisor Award in both the Turnaround Deal of the Year and Financial Services Deal of the Year categories for its work on the AmericanWest transaction. New York Times Dealbook Recognition The New York Times DealBook recognized Morrison & Foerster as a leading bankruptcy firm. 9

10 continued Industry Awards and Recognition American Lawyer A-List MoFo Named To A-List For Eighth Year Running Morrison & Foerster was once again named to the American Lawyer A-List the eighth consecutive year that the firm has been included on what is considered to be AmLaw s most prestigious list. The A-List is AmLaw s effort to look beyond pure dollars to quantify the qualities that define the 20 most successful law firms in America by scoring firms on four factors: revenue per lawyer, pro bono commitment, diversity among lawyers, and associate satisfaction. Turnaround Management Association 2011 TMA Awards Winner Morrison & Foerster s Bankruptcy & Restructuring Group won the Transaction of the Year Mid-Size Company Award at the 2011 TMA Awards for the AmericanWest transaction. Photo credited to Turnaround Management Association Members of the AmericanWest deal team, including Alexandra Steinberg Barrage, accept the Transaction of the Year Mid- Size Company Award at the 2011 Turnaround Management Association Awards. 10

11 Selected Publications + Client Alerts Click on Button for More Information Judicial Restraint in the Early Days Following Stern v. Marshall Adam Lewis, Alexandra Barrage, Vincent Novak, and Dina Kushner, November 29, 2011 MoFo Article Living Wills: The Final Rule A User Guide Dwight Smith, Larren Nashelsky, Alexandra Barrage and Jeremy Mandell, November 2011 MoFo Client Alert Mark IV Ruling: District Court Affirms Bankruptcy Court s Denial of Discharge of Environmental Obligations Larren Nashelsky, Todd Goren, and Kristin Hiensch, October 24, 2011 MoFo Client Alert Lothian Oil: Fifth Circuit Recharacterizes Non-Insiders Debt Claim as Equity Stefan Engelhardt and John Pintarelli, October 19, 2011 MoFo Client Alert Sunset Aviation, et al.: Delaware Bankruptcy Court Rejects Trustee s Attempt to Retroactively Apply Substantive Consolidation Order Melissa Hager and John Pintarelli, October 18, 2011 Mid-Year Review 2011: Our Bankruptcy & Restructuring Top 10 July 2011 (To catch up on MoFo s activities from the first half of the year, please see the Mid-Year Review 2011: Our Bankruptcy & Restructuring Top 10) 11

12 Contacts G. Larry Engel, Partner Todd M. Goren, Partner Gary S. Lee, Co-Chair Brett Miller, Partner Larren M. Nashelsky, Co-Chair Anthony Princi, Partner Adam Lewis Senior Counsel Alexandra S. Barrage Of Counsel Melissa A. Hager Of Counsel Kathleen E. Schaaf Senior Of Counsel Jordan A. Wishnew Of Counsel Melissa M. Crespo, Associate Renee L. Freimuth, Associate Kristin A. Hiensch, Associate William M. Hildbold, Associate Dina Kushner, Associate Samantha Martin, Associate Stacy L. Molison, Associate John A. Pintarelli, Associate Erica J. Richards, Associate James A. Newton, Associate Lorenzo Marinuzzi, Partner Norman S. Rosenbaum, Partner Vincent J. Novak, Associate 12

13 mofo.com 2012 Morrison & Foerster LLP mofo.com Prior results do not guarantee a similar outcome.