Category: Case Law

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Appeals Court Upholds Conviction In Insider Trading Case

A federal appeals panel on August 23, 2017 upheld the insider trading conviction of Mathew Martoma, the former analyst at SAC Capital Advisors. Background Attorneys for Mr. Martoma had argued that the government prosecutors did not introduce enough evidence that he had a sufficiently close relationship with Dr. Sidney Gilman who leaked confidential information about … Continue Reading

Hedge Fund Lawsuit Seeks Puerto Rico’s Bankruptcy Filing Dismissed And Other Developments

On Monday, August 7, 2017, the Aurelius Capital Management hedge fund, as a $468 million holder of Puerto Rico’s general obligation bonds, filed a lawsuit in the United States District Court in San Juan arguing that the federal Oversight Board, created by the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA), was unconstitutionally established. … Continue Reading

Puerto Rico Electric Power Authority Defaults

On July 2, 2017, Puerto Rico’s Fiscal Agency and Financial Advisory Authority announced that the island’s troubled power authority defaulted on a deal to restructure roughly $9 billion in bond debt and sought protection from its creditors. Power Authority Files for Bankruptcy The government said the move to file for bankruptcy was the only way … Continue Reading

Recent Developments In Puerto Rico Bankruptcy

As previously reported, the U.S. Congress last year approved the Puerto Rico Oversight, Management and Economic Stability Act (PROMESA) to address the island’s financial crisis. U.S. territories are barred from filing a traditional bankruptcy. Under the PROMESA legislation signed by former President Barack Obama, an Oversight Board and the Title III process were created. Title … Continue Reading

Puerto Rico Files For Bankruptcy Protection

The Commonwealth of Puerto Rico is seeking the largest municipal bankruptcy filing in U.S. history, after failed negotiations with creditors over its $70 billion debt crisis. That is more than four times the debt Detroit collapsed under. As previously reported, U.S. territories were barred from filing for a traditional bankruptcy, permitted for most U.S. cities … Continue Reading

Recent Important Insider Trading Trial

On Friday, April 7 of this year, the famed Las Vegas sports gambler William T. “Billy” Walters was found guilty in the U.S.  District Court for the Southern District of New York in Manhattan of 10 charges of securities fraud, wire fraud and conspiracy, the most serious of which carry a potential sentence of up … Continue Reading

Commentary On Nortel Networks Inc. Bankruptcy Court Ruling Re Trustee Fee Application

As previously reported in the article by Tina N. Moss and Yasamin N. Oloomi on March 31 of this year entitled “Nortel Court Rejects Noteholder Objection to Indenture Trustees’ Fees,” the United States Bankruptcy Court for the District of Delaware in In re Nortel Networks Inc., No. 09-10138(KG), 2017 WL932947 (Bankr. D. Del. Mar. 8, … Continue Reading

Second Circuit Court of Appeals Rules for Education Management In Marblegate Out-of-Court Restructuring

On January 17, 2017, in the Marblegate Asset Mgmt., LLC v. Educ. Mgmt. Fin. Corp. litigation (No. 15-2124-cv(L), (2d Cir. 2017), the U.S. Court of Appeals for the Second Circuit in Manhattan ruled in favor of the defendant, Education Management Corporation (EDMC), overturning the decision of the U.S. District Court for the Southern District of … Continue Reading

In An Insider Trading Case Supreme Court Sides With Prosecutors

On December 6, 2016, the United States Supreme Court ruled unanimously in favor of prosecutors in a major insider trading case – Salman v. United States1, stating that gifts of confidential information from business executives to relatives violate the securities laws. This case clarified what constitutes a “personal benefit.” The Supreme Court handed the government … Continue Reading

In re Energy Future Holdings Corp, et al.: Third Circuit Enforces Indenture Make Whole Provisions

The United States Court of Appeals for the Third Circuit, applying New York law, recently reversed two lower court rulings that had denied holders of EFIH first and second lien notes approximately $431 million in optional redemption premiums. The Third Circuit determined that the make whole provisions contained in the relevant first and second lien … Continue Reading

Bondholder Protections Resulting From Out-Of-Court Restructurings

Litigation involving two recent out-of-court restructurings have focused on interpreting broadly bondholder protections under the Trust Indenture Act of 1939, as amended. The two cases in the United States District Court for the Southern District of New York are: Marblegate Asset Management v. Education Management Corp. MeehanCombs Global Opportunity Funds, LP et al. v. Caesars … Continue Reading

Hedge Funds Sue Puerto Rico And Its Governor

On July 20, 2016, a group of hedge funds holding Puerto Rico’s most senior public debt – general obligation bonds and debt guaranteed by the commonwealth – sued the island and its Governor, Alejandro Garcia Padilla, saying the island siphoned money away from bondholders in breach of the new U.S. law entitled the Puerto Rico … Continue Reading

Congress Passes Puerto Rico Debt Relief Law

As previously reported, the U.S. House of Representatives on June 9th of this year approved legislation, entitled the “Puerto Rico Oversight, Management and Economic Stability Act,” (PROMESA), to stem the escalating debt crisis in Puerto Rico creating a federal financial control oversight board to help the island cope with its $72 billion in outstanding debt.1 … Continue Reading

U.S. House Passes Puerto Rico Debt Crisis Bill

On June 9, 2016, the United States House of Representatives approved legislation to stem the escalating debt crisis, after an unusually bi-partisan course on a fraught and technically complex compromise measure. After months of internal wrangling, the House passed legislation creating a federal control oversight board to help the Commonwealth of Puerto Rico cope with … Continue Reading

Puerto Rico Defaults On May 1, 2016 Payment

The Commonwealth of Puerto Rico defaulted on most of its $422 million May 1, 2016 debt service payment on Monday owed by the Government Development Bank which acts as Puerto Rico’s fiscal agent. Puerto Rico did pay $23 million representing the interest due. However, the remaining $399 million that was not paid represented the principal.… Continue Reading

Update On Argentina’s Efforts To Pay Holdout Bondholders

On March 31, 2016, the Senate of Argentina’s Congress approved measures that would allow the government to pay the six largest holdout bondholders. The lower House had approved the measures earlier in March. This was the last hurdle that Argentina’s new President, Mauricio Macri, had to clear inside Argentina in regard to making the payment.1… Continue Reading

Puerto Rico Presents Its Debt Crisis Case To The Supreme Court

As previously reported, Puerto Rico’s Governor Alejandro Garcia Padilla declared in June 2015 that the island’s $72 billion in debt was “not payable.” The Commonwealth of Puerto Rico has argued that it has been wrongly locked out of the bankruptcy courts, the only place it can reasonably expect to restructure its debt.1 Several financial creditors … Continue Reading

Argentina Reaches Settlement With The Four Remaining Largest Holdout Bondholders

As previously reported on February 19, 2016, two of the six largest holdout bondholders had agreed to accept Argentina’s settlement offer.1 The Republic of Argentina announced on February 29, 2016 that it had reached agreement of a payment settlement with the four remaining largest holdout bondholders. The deal is to pay $4.65 billion to settle … Continue Reading

Argentina Proposes Payment Offer to Holdout Bondholders

Argentina resumed talks with the holdout bondholders on February 1, 2016 after securing a $5 billion loan from Wall Street banks that will strengthen its hand in negotiations to end the 15 year long and bitter legal dispute.1 On February 5, 2016, the Republic of Argentina made an offer to U.S. holders of its defaulted … Continue Reading

New Argentina President Attempts to Resolve Litigation Regarding Debt Defaults

On October 25, 2015, the Republic of Argentina held its presidential election. The then current President, Cristina Fernandez de Kirchner constitutionally was barred from seeking a third consecutive term. In 2007, she had succeeded her husband, Nestor Kirchner, who had decided not to run, as president. He had been president since 2003. The presidential contenders … Continue Reading

Debt Crisis In Puerto Rico

The declaration in June of this year by Puerto Rico’s Governor Alejandro Garcia Padilla that the island’s $72 billion in debt was “not payable” was not only a warning to its creditors but also aimed at leaders in Washington who could determine whether Puerto Rico’s finances can be stabilized. The Governor called for a broadly … Continue Reading

Trust Indenture Act Increasingly Becoming The Focus Of Bondholder Litigation

On February 23rd, Ronald Sarubbi, a partner in Perkins Coie’s Financial Transactions and Restructuring group, was interviewed by TheDeal.com, where he discussed recent litigation involving the Trust Indenture Act. The Trust indenture Act (the “TIA”) was part of the New Deal Era securities reforms. Under the Section 211 of the 1934 Exchange Act, the SEC … Continue Reading

MBS Investors are Entitled to Increased Bankruptcy Distributions

Investors in mortgage-backed-securities (“MBS”) suffered significant losses in connection with the Financial Crisis. Those losses generated a substantial amount of litigation brought by MBS investors; much of it centered on securities-fraud based causes of actions against originators, sponsors, and/or depositors involved in securitizations. In addition to securities litigation, the Financial Crisis yielded many bankruptcy filings … Continue Reading

New Developments in the Argentina Litigation

On September 29, 2014, Judge Thomas P. Griesa of the United States District Court for the Southern District of New York ruled the Republic of Argentina in contempt of court. He stopped short of issuing sanctions, however, saying he would make a decision sometime in the future.… Continue Reading
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