► In This Issue:

• Boomerang Tube Inc.: the Delaware Bankruptcy Court Considers Fee-Shifting
  Defense Provisions and ASARCO
• The Continuing Saga of Nortel: Ontario Court of Appeal Confirms Bondholders Not
  Entitled to Post-Petition Interest
• Good News for Creditors: Ninth Circuit Court of Appeals Determines that Absolute Priority
  Rule Continues to Apply in Individual Chapter 11 Reorganizations
• Recording Available: UTC Presentation at Annual Spring Meeting

Boomerang Tube Inc.: the Delaware Bankruptcy Court Considers Fee-Shifting Defense Provisions and ASARCO

Susan E. Trent Rothberg Logan & Warsco LLP Fort Wayne, Ind.

In its January 2016 decision in Boomerang Tube Inc., Judge Mary F. Walrath of the Delaware Bankruptcy Court considered the U.S. Trustee’s (UST’s) objection to the retention application of counsel for the unsecured creditors’ committee, which took issue with a provision indemnifying committee counsel for further fees and expenses incurred for any successful defense of their fees. The court sustained the UST’s objection, finding that the fee-defense provision was not a permissible term of employment for committee counsel.

 Read More

The Continuing Saga of Nortel: Ontario Court of Appeal Confirms Bondholders Not Entitled to Post-Petition Interest

Kenneth David Kraft Dentons Canada LLP Toronto

Sara-Ann Van Allen Dentons Canada LLP Toronto

The Ontario Court of Appeal recently affirmed the decision of the Ontario Superior Court of Justice in Nortel Networks Corporation (Re) that the common law “Interest Stops Rule” applies in proceedings under Canada’s Companies’ Creditors Arrangement Act (CCAA). In the context of the joint allocation trial conducted between the Ontario court and the Delaware bankruptcy court, Justice Newbould of the Ontario Superior Court of Justice directed that two discrete issues be argued:

1. whether the holders of the crossover bond claims are legally entitled … to claim or receive any amounts under the relevant indentures above and beyond the outstanding principal debt and pre-petition interest (namely, above and beyond US$4.092 billion); and
2. if it is determined that the crossover bondholders are so entitled, what additional amounts are such holders entitled to so claim and receive.
   
    Read More

Good News for Creditors: Ninth Circuit Court of Appeals Determines that Absolute Priority Rule Continues to Apply in Individual Chapter 11 Reorganizations

Grant L. Cartwright Smith & Smith, PLLC Tucson, Ariz.

Recently, in Zachary v. Cal. Bank & Trust, the U.S. Court of Appeals for the Ninth Circuit agreed with the Fourth, Fifth, Sixth and Tenth Circuits in holding that the absolute priority rule continues to apply to individual chapter 11 reorganizations, notwithstanding the 2005 BAPCPA amendments to the Bankruptcy Code. The Zachary decision clearly enhances the leverage of unsecured creditors in individual chapter 11 cases.

 Read More

Recording Available: UTC Presentation at Annual Spring Meeting

The Unsecured Trade Creditors and Ethics & Professional Compensation committees paired at ABI’s recent Annual Spring Meeting in Washington, D.C. to present a session titled “Beware of the Traps: Ethical and Fiduciary Issues for Committee Members and Professionals.” Speakers for this session were Brent I. Weisenberg as Moderator (Ballard Spahr LLP; New York); Hon. Melanie L. Cyganowski (ret.) (Otterbourg P.C.; New York); Jeffrey N. Pomerantz (Pachulski Stang Ziehl & Jones LLP; Los Angeles); and Hon. Mary F. Walrath (U.S. Bankruptcy Court (D. Del.); Wilmington). Materials for this session can be found online.

Click here to review the educational session recording.