What we read this week [September 27, 2021] – Insolvency / Bankruptcy / Restructuring


United States: What we read this week [September 27, 2021]

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Bloomberg Law discusses pending certiorari motions requesting a review by the United States Supreme Court of the application by lower courts of the doctrine of “theoretical fairness”, which severely limits the ability of dissenting parties to appeal against orders upholding Chapter 11 reorganization plans. One of those petitions arises from the Nuverra Environmental Solutions case, which we have already discussed here. The Bloomberg article, which quotes Aaron Gavant, partner of Mayer Brown Restructuring and editor of Real Bankruptcy Intel, notes that theoretical fairness is a legal doctrine which, in practice, tends to preclude meaningful appellate review of ‘a plan already confirmed. The article also provides that the doctrine could come into play as part of Purdue Pharma’s reorganization plan in the event that the plan is not put on hold pending future appeals. [Bloomberg
Law; September 27, 2021]

Reuters reports on the US Federal Reserve’s plans to start cutting its $ 120 billion monthly bond purchases. The reduction will depend in part on another month of good jobs data, according to Fed Chairman Powell and Governor Brainard. However, Fed Governor Brainard also warned that slower-than-expected job growth in August and the prevalence of the COVID Delta variant make it difficult to predict when the economy will be strong enough for plans to Fed cuts continue. [Reuters; September 27, 2021]

Securities markets have become more cautious when dealing with Chinese property developers, in light of the problems Evergrande is facing and the “government’s tough stance on the property market,” according to the Wall Street Journal. The newspaper reports that stocks and bonds issued by real estate developer Sunac China Holdings recently lost significant value after it was reported that the developer was seeking government help to improve its liquidity. Sunac quickly confirmed that the request for assistance was only an “internal project” which had been prepared but not submitted. The episode highlights the fact, as one analyst said, that “the market is very sensitive after the woes of Evergrande”. [WSJ; September
27, 2021]

Law360 notes that a bipartisan group of US senators has reintroduced a bill designed to make it more difficult for debtor companies to select what they perceive to be friendly bankruptcy courts for their bankruptcy filings. The Bankruptcy Venue Reform Act of 2021, which is almost identical to a similar law that was proposed in 2018, was reintroduced in the Senate last week and would amend the provisions of the Judicial Code governing the venue to limit the options available to businesses that file for bankruptcy. . The article notes that the National Rifle Association attempted to use the current permissive place of bankruptcy law to file in Houston, Texas, despite being incorporated in New York and headquartered in Virginia; Likewise, Purdue Pharma was able to select “the specific judge who wished to hear his case by selecting the White Plains division” from the Southern District of New York. 2018 efforts to push through bankruptcy site reform have stalled in Congress and it is not clear whether this new attempt will play out any differently. [Law360; September 24, 2021]

In the event that art meets life meets bankruptcy, an entity owned by
South Park Creators Matt Stone and Trey Parker are seeking to purchase Denver’s Casa Bonita restaurant under Chapter 11 proceedings from its owner, Summit Family Restaurants Inc. Although it has been a local Colorado institution since 1974 and that its fame was reinforced by a 2003 South Park episode, Casa Bonita, like so many other companies in the hospitality industry, was unable to weather the COVID-19 pandemic. According to court documents, the purchase price of $ 3.1 million for Casa Bonita, if the sale is approved, will be enough to more than satisfy all of the claims filed in Summit’s bankruptcy case. [Canon City Daily Record; September 27,

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