Category: Default & Bankruptcy

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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 York Court Says RMBS Case Can Proceed

On October 21, 2014, the New York Supreme Court Appellate Division, First Department, paved the way for a $1 billion residential mortgage-backed securities (RMBS) case to proceed forward on its merits. In the underlying suit filed on February 1, 2013, Plaintiff U.S. Bank, as trustee for an RMBS trust, alleged that Defendant DLJ Mortgage Capital, … Continue Reading

Argentina Defaults

As previously reported, on June 16, 2014, in NML Capital, Ltd. et al., v The Republic of Argentina, the United States Supreme Court declined to hear Argentina’s petition for writ of certiorari ending Argentina’s chance of overturning the interpretation of the pari passu clause by the United States District Court for the Southern District of … Continue Reading

Argentina Defaults on Interest Payment

Argentina defaulted on its June 30, 2014 interest payment to the holders of the Exchange Bonds because it did not also pay the 1994 holdout bondholders in full as Judge Thomas P. Griesa of the United States District Court for the Southern District in New York had ruled and upheld by the United States Court … Continue Reading

What to Look For in a Liquidating Trust Agreement – Part 1

The establishment of a liquidating trust is becoming a standard provision of most chapter 11 plans. Although they may have different names and structures, such as creditor, GUC wind down or litigation trust, liquidating LLC and many others, they typically have the same basic purpose — to serve as a vehicle into which certain (generally, … Continue Reading

Lehman Brothers Decision Permits Payment of Indenture Trustee’s Attorneys Fees

The Bankruptcy Court for the Southern District of New York recently approved fee applications totaling $26 million for the professionals employed by individual members of the Official Committee of Unsecured Creditors, several of whom were indenture trustees.[1] Relying on the provisions of the confirmed plan in the Lehman Brothers Holdings bankruptcy cases, Judge Peck based … Continue Reading

S&P Default Report

On March 18, 2013, Standard & Poor’s published its 2012 Annual Global Corporate Default Study And Rating Transitions. This detailed report provides extensive data analysis, a summary of findings, and a discussion of global trends.… Continue Reading

No Clear Disclosure? No Third-Party Release In Chapter 11

A cautionary tale for indenture trustees regarding the adequacy of disclosure of third party release provisions in a chapter 11 debtor’s plan of reorganization… The U.S. District Court for the Eastern District of Pennsylvania recently held that the bankruptcy court did not abuse its discretion in excising from the debtors’ plan of reorganization a third … Continue Reading