Corporate Reorganization and Bankruptcy

Overview

Hughes Hubbard’s corporate reorganization and bankruptcy practice is multidisciplinary, integrating our creditor rights practice with our banking, litigation, corporate, mergers and acquisitions, capital markets, structured finance, labor, real estate, white collar crime, and tax and benefits practices. This combination of resources enables us to address the broad range of issues involved in dealing with a financially distressed company efficiently and effectively. We make every effort to assist our clients in avoiding time consuming and expensive litigation and bankruptcy proceedings. However, when litigation or bankruptcy is unavoidable, we represent our clients aggressively in court. Whether in connection with refinancing the debt of a troubled company or pursuing claims against a board of directors in the zone of insolvency, we use our bankruptcy expertise to help create value and protect our clients’ rights in distressed situations.

Our lawyers have played a leading role in some of the most widely publicized insolvency cases in the past twenty years. For example, we are currently representing James Giddens, the co-chair of our practice, as Trustee of Lehman Brothers, Inc., in the largest and most complex securities-broker dealer liquidation ever filed. We are also playing major roles in numerous high-profile chapter 11 cases (including Adelphia and Quebecor) and out-of-court workouts (including several in the media, monoline insurance, energy and real estate sectors).

With our recent acquisition of the bankruptcy and finance firm Luskin, Stern & Eisler, we now have over twenty-five experienced insolvency lawyers who serve clients throughout the United States, Asia, Latin America, and Europe.

Representation of Parties in Bankruptcy Proceedings

We represent domestic and foreign banks, finance and leasing companies, mezzanine lenders, credit corporations, landlords, trade creditors, bondholders, asset purchasers, claims traders, investors, hedge funds, and private equity funds in chapter 11 reorganizations, chapter 7 liquidations and other insolvency proceedings across a wide spectrum of global industries. We have also represented official and unofficial committees of secured and unsecured creditors in chapter 11 proceedings, been special counsel to airlines in chapter 11, and have represented debtors, trustees, and court-appointed examiners.

We have represented our clients in connection with debtor-in-possession financings, prepackaged plans, derivative transactions, asset sales, the sale and purchase of claims, the prosecution and defense of preference and fraudulent conveyance actions, motions for relief from the automatic stay, the appointment of chapter 11 trustees, the dismissal of chapter 11 cases, disputes concerning the use of cash collateral, and the defense of “lender liability” claims. We have negotiated and drafted plans of reorganization and disclosure statements and litigated both against and in favor of reorganization plans. Recent matters include representation of creditors in the chapter 11 proceedings of Adelphia, Refco, Enron, Calpine, PG&E National Energy Group, Mirant, Delta Airlines, New Century Capital, Parmalat, Quebecor and American Home Mortgage.

Loan Restructurings, Workouts and Related Litigation

Our lawyers frequently represent clients in connection with the restructuring and documentation of defaulted loans to companies in financial trouble, incorporating safeguards against the bankruptcy, insolvency, and structural risks that we frequently encounter. Much of our restructuring work has involved syndicated-loan transactions, including project finance loans, asset-backed securitizations, mortgage-backed securitizations, collateralized debt-obligations, failed leveraged-buyouts and roll-ups, and the refinancing of senior-debt facilities. Many of our cases have involved cross-border insolvencies in Asia, Latin America, Canada, and Europe. We also have substantial experience in workouts involving monoline insurers and derivative transactions, including credit default swaps and repurchase agreements.

Insolvencies in the Securities and Banking Industries

The firm has been preeminent in dealing with insolvency issues affecting the securities and banking industries in liquidations under SIPC, FDIC receiverships, and most recently in connection with representation of the federal government in making equity investments in banks as part of the U.S. Treasury Department’s $700-billion financial rescue package.

Our practice is particularly distinguished by our involvement in the liquidation of brokerage firms under the Securities Investor Protection Act. Our lawyers played a significant role in several SIPC proceedings in the past and we were recently appointed as counsel to the Trustee for the liquidation of the broker-dealer arm of Lehman Brothers, Inc.

Selected Creditor Transactions

• ABN Amro Bank as agent for a group of lenders in connection with the workout of loans secured by a power plant in Pakistan; as agent for a group of lenders in connection with the workout of a loan to Cerro Negro, an oil and gas company owned by the government of Venezuela; as agent for a group of lenders in connection with the workout of loans to a Brazilian food manufacturer; and as a defendant in connection with litigation against JPMorgan Chase, Bear Stearns, and ABN – arising out of the recent JPMorgan Chase-Bear Stearns merger – involving the right to Bear Stearns’s headquarters in Manhattan.
• Aetna as a defendant in litigation brought by Enron relating to a $1.2-billion commercial-paper program.
• Alstom as acquirer of assets in the Calpine chapter 11 case.
• The Bank of Nova Scotia as agent for a forty member lender group in the Adelphia chapter 11 proceedings including litigation of the lender group’s claims in the Bankruptcy Court and the District Court; negotiation of favorable treatment under Adelphia’s plans of reorganization; and defense of the lenders in a major “lender liability” case brought in the U.S. District Court by the Creditors’ Committee and a litigation trust established under the plans.
• Christie’s as the largest creditor in the Berry-hill Gallery restructuring.
• Citibank and its affiliates individually and as agent in the restructurings and refinancing of financially troubled companies in the automotive, real estate, art dealership, airline, aircraft leasing, school construction, radio broadcasting, equipment supply, and advertising industries and in numerous bankruptcy cases and loan enforcement proceedings including the cases of a regional fast-food franchisee, domestic and international commercial airlines and energy supply companies.
• Daimler Chrysler Financial in aircraft lease transactions, including in connection with the chapter 11 cases of United, Delta, Independence Air, and USAir.
• Deutsche Bank in connection with a joint venture with Sterling Equities as mortgagee in a single-asset real estate chapter 11 case in which we obtained a ruling from the Court of Appeals for the Second Circuit rejecting confirmation of a “new value” plan and significantly limiting the availability of such plans; and as agent for groups of banks in the chapter 11 cases of American Pad & Paper Company, Automata International, Inc., and HCI Direct Inc.
• Federal National Mortgage Association in judicial and out-of-court restructurings, including as a secured creditor in the Alterra Healthcare chapter 11 case.
• Federal Deposit Insurance Corporation in connection with twenty-six lawsuits arising out of the failure of IndyMac Bank, F.S.B. in Pasadena, California, and in connection with lawsuits relating to the insolvency of Washington Mutual.
• Loews Corporation affiliates as hotel owner, operator, and creditor in the Lake at Las Vegas chapter 11 cases.
• M&T Bank in litigation and out-of-court disputes involving real estate mortgages, check-kiting and embezzlement schemes, sub-prime and alt-A loan securitizations, equipment leases, and asset-based loans.
• MediaNews Group in connection with commodity swap agreements and creditor claims in the chapter 11 cases of Enron, Kmart, and Mirant.
• Pension Benefit Guaranty Corporation as a committee member, creditor, and administrator of pension plan termination insurance program in the Quebecor chapter 11 proceedings.
• SES Americom, Inc., one of the world’s largest satellite companies, in complex litigation relating to its purchase of substantially all the assets of the debtor in the Verestar chapter 11 case.
• Société Générale as agent in connection with several workouts of troubled-project finance loans including Imperium Greys Harbor, GenHoldings, Kendall, RS Cogen, and Panda Herford; as a counterparty to credit default swaps with Ambac, Syncora, Bluepoint, CIFG, FIGC, and ACA; in the workouts and, in some cases, bankruptcy proceedings of borrowers in the subprime mortgage industry including C-Bass, American Home Mortgage, and New Century Capital Corp; as a creditor in connection with numerous chapter 11 proceedings including Quebecor, Enron, Warnaco, Sunterra, NRG Energy, PG&E National Energy Group, Stellex, Owens Corning, and Federal Mogul; and in connection with workouts and insolvency proceedings in Latin America and South America, including proceedings involving Tribasa, Grupo Acerero del Norte, and Czarnikow Rionda.
• SONY Entertainment, Inc. in connection with the chapter 11 cases of Three A’s Holdings, L.L.C., and Golden Books; in the workout and bankruptcy filings of several recording artists including the chapter 11 cases of Merle Haggard in California and Peabo Bryson in North Carolina; and in litigation prosecuted by a chapter 7 trustee of a record distributor.
• Sumitomo Mitsui Banking Corporation as agent and lender in connection with various aircraft financings in the U.S. Airways and United Airlines chapter 11 proceedings and in connection with several out-of-court restructurings, including as agent for four participants in the workout of a letter-of-credit facility to a not-for-profit hospital.
• Sun Capital Partners as the largest secured creditor and equity holder in the chapter 11 case of Lillian Vernon.
• Toyota Motor Credit Corp. as a secured creditor in connection with the Performance Transportation and Hi-Lift chapter 11 cases.
• Union Bank of California in workouts and out-of-court restructurings relating to project financings.

Other Selected Matters

• U.S. Treasury Department in connection with contracts for equity purchases in banks as part of the Department’s $700-billion financial rescue program.
• SIPC Trustees for major brokerage firm liquidations under the Securities Investor Protection Act, including Lehman Brothers Inc., A.R. Baron & Co., Inc., and New Times Securities Services, Inc., and the Administrator of a $30 million Investor Restitution Fund in A.R. Baron & Co., Inc.
• Examiner in the Nellson Nutraceutical chapter 11 case in Delaware.
• Creditors’ Committees in the Pacific Gas & Electric, Hanbro Iron & Steel Co., Crown Books, Seychelles Fund, and Great American Audio cases; committees of secured creditors in the Integrated Resources and Public Service of New Hampshire chapter 11 cases; and an unofficial committee of bondholders in the second TWA chapter 11 case.
• Counsel to the Debtor in the chapter 11 cases of Worldtex, Inc. and Willcox & Gibbs and general corporate counsel to Northwest Airlines, Inc. as a debtor in possession.
• Chapter 7 Trustees of multiple debtors that were involved in the cable installation business and of multiple debtors involved in a massive fraud in the electronics industry.
• Plan Administrator of The Parmalat USA Corp. in connection with certain bankruptcy-related causes of action.
• Special Committee of Board of Directors of a parent corporation in connection with the chapter 11 case of the corporation’s subsidiary.
• Foreign Representatives in connection with the chapter 15 cross-border filings of Nameiri-Showa Co., Ltd. and Baronet Inc.