business restructuring + insolvency year-end review …
TRANSCRIPT
BUSINESS RESTRUCTURING + INSOLVENCY YEAR-END REVIEW 2013
2 Business Restructuring + Insolvency Year-End Review 2013
INSIDE3 A Year in Review
4 Lehman Bankruptcy Judge Hon. James M. Peck Joins Morrison & Foerster
5 New Members of Our International Team
6 ResCap in Review
9 Our Engagements
13 Around the Globe
16 Pro Bono Matters
19 Awards + Recognition
20 Our U.S. Team
21 Our International Team
3 Business Restructuring + Insolvency Year-End Review 2013
As we reflect on 2013 and look ahead to the next year, there is no doubt that Morrison & Foerster’s Business Restructuring + Insolvency Group has just experienced the most transformative period in our practice’s history. Last year, in recognition of the quality and breadth of the matters we handled, Chambers USA named us “Bankruptcy Firm of the Year.” Here are a few highlights from the past 12 months:
• As lead counsel to Residential Capital in its chapter 11 case, we confirmed and effectuated a chapter 11 plan that embodies a global settlement resolving in excess of $100 billion in claims. Earlier in the year we closed the sales of ResCap’s mortgage loan origination and servicing business and legacy loan portfolio to Ocwen Loan Servicing, LLC and Berkshire Hathaway Inc., respectively, which marked the first time that a sustainable servicing and origination platform has been sold in chapter 11.
• As lead counsel to Louis Freeh, the chapter 11 trustee for MF Global, we effectuated a global settlement of intercompany claims that will result in the return of more than $1 billion to the debtors’ estates, and allowed for confirmation of a chapter 11 plan and the initiation of distributions to creditors.
• As counsel to the creditors’ committee in the chapter 11 case of Ambac Financial Group we tackled complex and novel bankruptcy, tax, insurance regulatory, and litigation issues that led the parties to a negotiate a global settlement of claims and allowed the debtor to emerge from bankruptcy in 2013 with the issuance of new capital stock with market capital and corresponding recoveries to creditors of over $1 billion.
These matters, and others we have worked on over the past year, are described in greater detail in the following pages.
Thanks to the foundation we have laid, we have a lot to look forward to in the year ahead. As you are probably aware, we recently announced that Hon. James M. Peck, former United States Bankruptcy Judge for the Southern District of New York has joined our practice as of March 3, 2014. His experience in complex cross-border and domestic bankruptcies, including that of Lehman Brothers, will add a wealth of expertise to our practice. In case you missed it, you can review the announcement on the following page.
Judge Peck’s arrival comes on the heels of Howard Morris who joined our London office as head of the Business Restructuring + Insolvency Group there late last year. The addition of Howard, along with highly regarded restructuring lawyers Jörg Meißner and Thomas Keul in our new Berlin office, significantly enhances our ability to handle complex restructuring matters in the UK and across Europe.
Needless to say, this is an exciting time for us. We are forever grateful for the support of our clients and friends and we look forward to working with you in the year ahead.
Thank you.
– The Business Restructuring + Insolvency Group of Morrison & Foerster
A YEAR IN REVIEW
4 Business Restructuring + Insolvency Year-End Review 2013
Lehman Bankruptcy Judge
hON. jAmES m. pECk Joins Morrison & Foerster.
We are pleased to announce that Hon. James M. Peck has joined the firm as co-chair of its global Business Restructuring + Insolvency Group, effective March 3, 2014.
During his tenure as United States Bankruptcy Judge for the Southern District of New York, Judge Peck presided over the chapter 11 and SIPA cases of Lehman Brothers and its affiliates, which collectively held approximately $600 billion assets at the time of filing, constituting the largest bankruptcy filing in U.S. history. Other notable matters over which Judge Peck presided include the chapter 11 cases of Iridium, Quebecor, Charter Communications, Extended Stay Hotels, and ION Media and the chapter 15 case of Japan Airlines. Judge Peck also acted as a mediator in several high-profile cases including American Airlines, Syms/Filenes, MF Global, General Motors Nova Scotia noteholders, Residential Capital, and Excel Maritime.
A practitioner of Judge Peck’s stature enhances our already robust practice in complex and cross-border restructuring. He offers a wealth of expertise in areas where he has helped advance bankruptcy law, including derivatives and the bankruptcy safe
harbors. Judge Peck also brings expertise in complex domestic and cross-border mediation.
Judge Peck joins at a time of meteoric trajectory for the practice. The firm has recently advised on a number of high-profile cases, including representing Residential Capital, LLC, one of the largest real estate finance companies in the world, as the debtor in the largest chapter 11 case of 2012. In addition, the group represented the chapter 11 trustee for MF Global in the largest chapter 11 case of 2011. Morrison & Foerster played a significant role in Iceland’s bank restructurings through its representation of the Resolution Committee and Winding-up Board of Landsbanki Islands hf. The group also represents official creditors’ committees in some of the highest-profile cases, including in the recent cases of the Los Angeles Dodgers and Ambac Financial Group. Indeed, the firm was named “Bankruptcy Firm of the Year” for 2013 by Chambers USA.
We look forward to introducing you to Judge Peck. For more information please contact Gary S. Lee ([email protected]) or Lacey Laken ([email protected]).
Learn more about Judge Peck and the firm’s Business Restructuring + Insolvency Group.
Former judge who presided over the largest bankruptcy in U.S. history will co-chair the firm’s global Business Restructuring + Insolvency Group.
5 Business Restructuring + Insolvency Year-End Review 2013
NEW mEmBERS Of OUR INTERNATIONAL TEAmIn addition to Judge Peck joining our firm in the New York office, we are excited to have new editions to our international restructuring and insolvency platform. New members of our international team include:
Howard Morris is head of the London Business Restructuring + Insolvency Group at Morrison & Foerster. Mr. Morris has more than 20 years’ experience in UK and international restructuring and insolvency work. He has acted for banks and other secured and unsecured creditors, committees of bondholders, trade creditors, debtors, and acquirers of business and assets from insolvent companies. He has experience in international asset tracing and recovery, as well as a strong background in banking and finance.
Mr. Morris’s experience extends to matters involving the UK, the U.S., and a number of other jurisdictions, including continental Europe, central Asia, Russia, Africa, the Middle East, and offshore financial centers. He is a member of the Association of Business Recovery Professionals.
Howard Morris London
Dr. Jörg Meißner and Dr. Thomas Keul are partners in the Berlin office of Morrison & Foerster and are highly experienced in advising on restructuring and insolvency-related matters. They frequently work with companies and investors as strategic advisors in distressed and insolvency situations.
Dr. Meißner has particular experience advising domestic and international companies, investors, and lenders in respect of distressed M&A transactions, debt restructurings, and general corporate and finance questions.
Dr. Keul advises clients on insolvency-related corporate and litigation matters such as management, shareholder and lender liability, collateral enforcement, and asset recovery.
Jörg Meißner Berlin
Thomas Keul Berlin
6 Business Restructuring + Insolvency Year-End Review 2013
RESCAp IN REVIEW“This case is certainly the most legally and factually complex case that I’ve presided over....”
— Hon. Martin Glenn
7 Business Restructuring + Insolvency Year-End Review 2013
On December 11, 2013 – after only 19 months in bankruptcy – Morrison & Foerster successfully confirmed the chapter 11 plan of Residential Capital. At the confirmation hearing, Judge Martin Glenn, who presided over the case in the Southern District of New York, called the ResCap bankruptcy “the most legally and factually complex case that I’ve presided over … [with] more unsettled legal issues than I’ve seen in my seven years on the bench or thirty-four years in law practice before that.”
From the outset of the case, ResCap grappled with a crippling array of potential and pending complex litigation, often involving legal theories of first impression. In addition to the difficulties associated with quantifying billions of dollars in disputed claims, obtaining debtor-in-possession financing, and securing a going-concern bid for the debtors’ businesses, ResCap was forced to do so under the overlay of federal and state regulatory requirements applicable to its business operations. The ultimate successful disposition of the ResCap case was made possible by the hard work and seamless integration of departments across MoFo, including the Business Restructuring + Insolvency Group, Capital Markets, Litigation, Tax, and our finance practices.
Prior to filing for bankruptcy, ResCap was a leading originator of residential mortgage loans and, together with its affiliates, the fifth largest servicer of residential mortgage loans in the U.S., servicing approximately $374 billion of domestic residential mortgage loans and working with more than 2.4 million mortgage loans across the country.
MoFo successfully engineered ResCap’s seamless transition into bankruptcy by negotiating more
than $1.6 billion in new debtor-in-possession financing. These efforts by MoFo paved the way for the $4.5 billion sale of ResCap’s live mortgage origination and servicing business – an unprecedented feat in bankruptcy – and legacy mortgage loan portfolio, and helped preserve thousands of jobs in an industry battered by economic downturn and increased governmental oversight and regulation. After filing, MoFo successfully assisted ResCap’s management with continuing to run and operate its mortgage origination and servicing business, which required continuous monitoring and compliance with the agreements and obligations that ResCap owed to the U.S. government, the State Attorneys General, the Federal Reserve Board, and other governmental or government-sponsored agencies.
MoFo negotiated, documented, and obtained court approval for the sale of ResCap’s mortgage loan servicing and origination platform (effectively comprising the entirety of ResCap’s operating business) to Ocwen Loan Servicing, LLC, and the company’s legacy loan portfolio to Berkshire Hathaway Inc. The sales generated more than $4.5 billion for the auctioned assets, translating to approximately $1 billion in incremental value for the debtors’ estates over what the debtors would have received through the respective stalking horse transactions.
Both during and after the sale, ResCap devoted its attention to resolving the numerous disputes with and among its various creditor constituencies. For example, significant disputes existed, including over: the estate and third-party claims against ResCap’s non-debtor parent Ally Financial Inc.; the allocation of sale proceeds, potential proceeds of claims held by ResCap, and administrative
8 Business Restructuring + Insolvency Year-End Review 2013
claims among the debtor entities; the validity of liens against the debtors’ assets and creditor entitlement to postpetition interest and fees; possible substantive consolidation of the various debtor entities; and the treatment of potential intercompany claims among the estates, including subrogation claims and fraudulent conveyance claims related to the debtors’ forgiveness of more than $16 billion of intercompany debt prior to the petition date.
Reaching a settlement of these numerous and complex issues was daunting. However, the alternative was, as Judge Glenn called it, close to “nuclear war.” When it became clear that the parties were entrenched in their respective litigation positions and reluctant to compromise, ResCap sought the appointment of the Honorable James M. Peck as estate mediator and Mr. Lewis Kruger as Chief Restructuring Officer. The appointments proved successful in resolving myriad complex issues facing the estates, driving divergent parties to the table and keeping them there for nearly six months. The result was a near-global resolution with all but one of ResCap’s key creditor constituencies that included a $2.1 billion cash infusion from Ally.
The lone holdouts were the Junior Secured Noteholders, who insisted that the value of their collateral far exceeded the $2.2 billion of notes held, and, as a result, were entitled to approximately $342 million in interest that accrued since ResCap filed for bankruptcy in May 2012.
ResCap’s battle with the Junior Secured Noteholders unfolded in a trial commenced by ResCap and the creditors’ committee that was bifurcated into two phases. Phase I took place prior to confirmation and pertained solely to
issues related to the Junior Secured Noteholders. Phase II was held in conjunction with the confirmation hearing and involved issues that could potentially affect a broader group of parties in the bankruptcy case. MoFo spearheaded the litigation effort in seamless coordination with counsel for the creditors’ committee.
At the end of the six-day Phase I trial, Judge Glenn handed down a 177-page decision that resulted in victory for ResCap. In the decision, the court found that the Junior Secured Noteholders were undersecured by $318 million, placing the burden on the Junior Secured Noteholders to demonstrate in Phase II of the trial that they had a lien on additional collateral that was sufficient to make up the shortfall and entitle them to postpetition interest.
Leading up to the confirmation hearing, MoFo was successful in resolving nearly all substantive plan objections other than those raised by the Junior Secured Noteholders. As such, the five- day confirmation hearing was almost entirely devoted to the question regarding whether the Junior Secured Noteholders were entitled to post-petition interest.
ResCap continued to dual track confirmation and the Phase II trial with mediation sessions under the capable guidance of Judge Peck. Ultimately, mediation was successful and ResCap and the creditors’ committee reached a deal with the Junior Secured Noteholders for payment of $125 million in postpetition interest and accrued fees in exchange for support of ResCap’s plan.
Judge Glenn entered an order confirming the plan on December 11, 2013, and the plan went effective approximately one week later.
9 Business Restructuring + Insolvency Year-End Review 2013
OUR ENGAGEmENTS
10 Business Restructuring + Insolvency Year-End Review 2013
In addition to our successful work as debtors’ counsel to Residential Capital and its affiliates in their chapter 11 cases, we were also involved in a number of other high-profile and successful matters in 2013.
MF Global
MoFo represented Louis Freeh as chapter 11 trustee for MF Global. In April 2013, MF Global won bankruptcy court approval of a chapter 11 plan to liquidate its assets, make distributions to creditors and, ultimately, conclude its bankruptcy.
Due to the size and complexity of MF Global’s worldwide operations, and that there were multiple insolvency proceedings occurring simultaneously around the world, it was clear that the resolution of these cases was not straightforward. Indeed, global collapses of this type were unprecedented prior to the most recent financial crisis and there was no clear roadmap for efficient and effective resolution.
The vast majority (roughly 95 percent) of global assets were held in the three largest estates – the chapter 11 estate, the SIPA estate, and the estates of MF Global’s affiliates in the UK, with several billion dollars of intercompany claims asserted among the various estates. In order to resolve MF Global’s chapter 11 cases in a timely manner, MoFo worked to broker three interwoven, bilateral agreements between (i) the chapter 11 debtors and the SIPA trustee, (ii) the chapter 11 debtors and the Special Administrator in the UK and (iii) the SIPA trustee and the Special Administrator in the UK, all in a little over a year. Together, these agreements effectuated a global settlement of intercompany claims that will result in the eventual return of more than $1 billion to the chapter 11 debtors, and allowed for confirmation of a chapter 11 plan and the initiation of distributions to creditors.
MoFo continues to work on the matter, now representing the plan administrator in resolving and settling outstanding claims against the debtors, as well as advising the company and its board on legacy issues. In addition, we are representing the litigation trustee in the litigation against former officers and directors commenced by the former chapter 11 trustee.
Over the course of the case, on behalf of the chapter 11 trustee, we conducted an investigation and, in early April 2013, filed a report with the bankruptcy court attributing blame for MF Global’s collapse to the actions and failures of key members of MF Global’s former management, in particular Jon Corzine (former CEO and chairman), Bradley Abelow (former COO) and Henri Steenkamp (former CFO). Following this, in late April 2013, we filed a lawsuit against the former officers for breach of their fiduciary duties and failure to act in good faith — which ultimately resulted in the collapse and bankruptcy of MF Global. The lawsuit is currently pending before the Bankruptcy Court for the Southern District of New York.
Ambac
MoFo represented the creditors’ committee in the chapter 11 case of Ambac Financial Group, a holding company whose affiliates provide financial guarantees and financial services to clients worldwide. Ambac, one of the largest monoline financial guaranty insurers in the world, suffered massive losses primarily due to its exposure to asset-backed and mortgage-backed securities and filed for bankruptcy in November 2010. This was a complicated matter involving multiple layers of claims and disputes.
Drawing upon our experience in insurance insolvencies and chapter 11 proceedings and our
11 Business Restructuring + Insolvency Year-End Review 2013
in-depth understanding of nuanced tax issues, we were able to tackle complex and novel bankruptcy, tax, insurance regulatory and litigation issues that led the parties to a negotiate a global settlement of claims that were asserted for the IRS and the Wisconsin Insurance Commissioner. MoFo’s efforts resulted in more than a 15% increase in the value of the bonds held by creditors as of the confirmation date of the plan, and paved the way for a market capitalization that today is close to $1.5 billion. This case represents the first “partial” insurance company rehabilitation in U.S. history.
Eastman Kodak Company
MoFo acted as lead bankruptcy counsel to numerous intellectual property licensees and licensors in the Kodak bankruptcy case, including Intel, Nikon and Dai Nippon Printing Co., Ltd., in addition to other creditors. We fought to preserve and protect our clients’ intellectual property rights, including by leading an ad hoc group of major technology companies in fiercely opposing various improper sale and plan proposals by Kodak and by negotiating protective provisions for the resulting sale orders and disclosure statement. Many of our clients also sought our expertise in the bankruptcy sale and claims processes in this case, including seeking advice on how best to protect key intellectual property and related rights in bankruptcy. In addition, MoFo represented Kyocera Corporation in defending its rights, claims, defenses and interests in connection with patent and related litigation against Kodak pending in various courts, ultimately resulting in a successful global settlement that preserved considerable value for Kyocera.
Triad
MoFo has been retained as special counsel to the debtor in the chapter 11 case of Triad Guaranty Inc. (TGI). In particular, we are advising on
bankruptcy-related tax and regulatory issues. Triad is the parent company of an Illinois domiciled insurance company that provided private mortgage insurance in all 50 states and the District of Columbia prior to the commencement of an insurance rehabilitation proceeding in 2012. TGI filed for bankruptcy in June 2013.
The bankruptcy court overseeing the chapter 11 case recently ruled in favor of TGI on an important and recurring issue in situations involving dueling bankruptcy and state court insolvency estates–namely, whether the McCarran-Ferguson Act (which in some instances, acts to reverse preempt federal law in favor of state laws regulating the “business of insurance”) strips bankruptcy courts of jurisdiction to decide disputes regarding the respective federal tax law rights of a holding company in bankruptcy and an insurance subsidiary in rehabilitation. This issue commonly arises in insurance holding company bankruptcy cases, but until the TGI decision, it had not been decided by a bankruptcy court.
The court concluded that the adversary proceeding involved issues of federal tax law and property rights, not the operation of an insurance business and denied in substantial part the insurance subsidiary’s motion to dismiss TGI’s complaint for declaratory relief. The litigation between TGI and its insurance subsidiaries remains ongoing, but the bankruptcy court’s favorable decision eliminated one of the most important and novel issues in the litigation.
Global Aviation
In November we were retained as counsel to the official committee of unsecured creditors for Global Aviation Holdings Inc. and its affiliates in their chapter 11 cases, which were filed in Delaware. Global Aviation, through its World Airways
12 Business Restructuring + Insolvency Year-End Review 2013
and North American airlines, provides military, cargo, passenger and commercial charter air transportation. We are currently working with the debtors to conduct a sale process with a stalking horse bid from the secured lender, Cerberus. In addition, in February, the committee entered into a plan support agreement with Cerberus and the debtors outlining terms of a consensual plan in the event that Cerberus is the purchaser.
Pinnacle
We represented the creditors’ committee in the chapter 11 case of Pinnacle Airlines Corp., which resulted in a chapter 11 plan in which Delta would own the reorganized company upon exit from bankruptcy. The plan was confirmed in April and went effective on May 1, 2013. The acquisition of Pinnacle by Delta closed in early May. Furthermore, creditors will receive a distribution under the plan that, although small, is certainly more than they would have received under a liquidation, which was perilously close at certain points during the case.
PMI
As counsel to the creditors’ committee in the chapter 11 case of the PMI Group, Inc., our efforts and leadership in a complex mediation facilitated a consensual resolution among the debtor, the debtor’s regulated insurance subsidiary (MIC) and the Arizona Insurance Commissioner overseeing MIC’s stock court rehabilitation. As a result of the successful mediation, we were able to realize value for a substantial portion of the debtor’s net operating losses, and unlock the residual value at the debtor’s reinsurance subsidiaries. On July 25, 2013, the bankruptcy court confirmed the debtor’s plan of reorganization, which was proposed with substantial input and direction from MoFo and its constituents and preserves the balance
of the consolidated tax group’s tax attributes for future use by the reorganized debtor. The reorganized debtor emerged from bankruptcy with a clean balance sheet and the ability to utilize the remaining tax attributes to realize additional value for the debtor’s prepetition creditors through future investments.
Soundview
The firm represents the Grand Court of the Cayman Islands-appointed liquidators of three investment funds operated by Alphonse “Buddy” Fletcher known as the Soundview funds. During the six months since the appointment of the liquidators, MoFo has led the liquidators’ extensive investigation into all aspects of the downfall of these funds, including potential fraudulent transactions, nefarious business practices and mismanagement by the former managers and directors of the funds. Recently, the Southern District of New York Bankruptcy Court appointed a chapter 11 trustee over the funds, with whom MoFo is negotiating an international protocol, which will provide for dual proceedings, and the liquidation of the funds, in the Cayman Islands and the United States.
Madoff Clawback Proceedings
MoFo represents the liquidators of multiple Cayman Islands investment funds in proceedings in the Bankruptcy Court for the Southern District of New York by defending the clawback and recovery of very significant sums claimed to be “Customer Property” which were transferred from a large Madoff feeder fund.
AROUND ThE GLOBE
14 Business Restructuring + Insolvency Year-End Review 2013
Lehman Brothers Japan
We represent Lehman Brothers Japan (LBJ) and its affiliates as creditors in Lehman’s U.S. chapter 11 case and the related SIPA proceedings involving Lehman Brothers Inc. (LBI). The nature of the affiliated cross-border relationships and often conflicting legal systems complicated the resolution of the inter-affiliate disputes. LBJ asserted claims against the U.S. Lehman entities in excess of $1 billion. Ultimately, MoFo was able to assist LBJ in resolving its disputes with each of the Lehman chapter 11 debtors as well as the LBI SIPA estate. The latter disputes were resolved through a settlement agreement providing for allowed LBJ customer and unsecured claims against the LBI SIPA estate in excess of $500 million. That settlement agreement was approved by the bankruptcy court on February 7, 2014.
HMV Administration
In connection with the administration in the UK and Ireland of HMV, a major entertainment retail chain, MoFo London represented a number of supplier creditors, including Warner Music UK, Paramount Home Entertainment, Cinram, Arvato, Channel 4 and ITV, as well as two Sony businesses encompassing Sony Music Entertainment UK and Sony DADC UK. MoFo concluded settlements with the administrators of HMV on behalf of the suppliers for the stock that remained at the stores when it went into administration, which also has paved the way for the future supply of stock to the new HMV entity.
Landmark Supreme Court Ruling in Icelandic Bank Collapse
MoFo continues to represent Landsbanki Islands hf. (n/k/a LBI hf.), one of the three largest banks in Iceland that collapsed in 2008 with combined liabilities in excess of $65 billion. Most recently,
we have represented Landsbanki in proceedings in the Supreme Court of the United Kingdom against Heritable Bank, a subsidiary of Landsbanki in Scotland. The Supreme Court recently held that, although as a matter of Icelandic law, Heritable’s claims against Landsbanki had been extinguished, they could still be used for the purpose of set-off in Heritable’s administration against the claims submitted by Landsbanki. This complex cross-border litigation raises important issues in respect of the interaction of European Economic Area and national rules for litigation within a winding-up process. The Supreme Court’s decision is a landmark ruling for set-off in cross-border insolvencies.
MF Global UK
Our London office has been advising on various issues in relation to the MF Global UK estates in order to recover assets for the MF Global U.S. estates which were formerly in chapter 11 proceedings. MoFo has successfully concluded an agreement with the Special Administrators as part of a global settlement that has allowed a more efficient and cost-effective distribution to the creditors of all the MF Global estates.
Liquidators of Saad Investments Company Limited
We continue to work with the liquidators of the Cayman Islands company, Saad Investments Company Limited (SICL), in connection with its $9.2 billion liquidation. We are resolving issues arising from a $2.815 billion loan to SICL under an unsecured English law governed revolving credit facility. Some banks in the loan syndicate also had bilateral facilities with SICL and some hold assets worth several hundred million dollars for SICL. The banks’ rights of security and set-off in respect of those assets, which are located across numerous jurisdictions and are held pursuant to agreements
15 Business Restructuring + Insolvency Year-End Review 2013
with differing governing law clauses (including Swiss, English, and New York law), have been some of the major issues we are handling. We have also been assisting the Swiss bankruptcy trustee with a variety of issues arising in an independent, local mini-bankruptcy proceeding in Switzerland, have been seeking information under compulsion from a major institution in London and have commenced proceedings in London seeking to recover over $300 million from a third party.
Bankruptcy of Maythem Al-Ansari
We continue to advise the trustees in the bankruptcy of Maythem Al-Ansari, who was convicted on charges of money laundering and whose assets include more than 80 properties in the UK, Dubai, Morocco, Spain, and India. Recently, we obtained judgment against the debtor’s wife to recover certain assets she claimed belonged to her rather than the debtor. This case is particularly interesting because the trustees successfully made an application to vary the criminal restraint order to enable them to deal with the defendant’s assets under the Insolvency Act 1986, something we believe has never been done before.
Land Bank of Taiwan
A cross-practice, cross-office MoFo team from London and New York represented Land Bank of Taiwan in relation to a dispute with Lehman Brothers. The main issue at stake was the applicability of flip clauses in derivatives disputes. A flip clause operates to invert investor priority rights to repayment in the event of a default that affects the value of a security. The Supreme Court of the United Kingdom, in the Belmont Park case, held that flip clauses were enforceable under English law. However, a New York judge has given a first instance decision finding that they are not enforceable under the U.S. Bankruptcy Code.
Following a compulsory mediation in New York, the parties have now concluded a successful settlement of all the issues in dispute.
Koritsu Kasei K.K.
Through our Tokyo office, MoFo represents Japanese company Koritsu Kasei K.K. and its subsidiary Koritsu Mold K.K. in a civil rehabilitation case, which is similar to chapter 11 proceedings in the U.S. The debtors are plastics manufacturers and have sold their operating business to their sponsor. We submitted a rehabilitation plan on their behalf, which was confirmed by the court in late February, and we expect that it will go effective in late March.
pRO BONO mATTERS
17 Business Restructuring + Insolvency Year-End Review 2013
Finding time for pro bono was especially challenging for lawyers in the Business Restructuring + Insolvency group this year – but somehow they managed to contribute their talents to a wide variety of projects. Here is a sampling:
Favela Project
Brett Miller’s soccer-playing son was the unexpected source of his pro bono work – incorporating the Favela Project as a nonprofit and applying for tax-exempt status. The project is led by a former Brazilian professional soccer player who happens to coach Brett’s son. The main activity is collecting used soccer equipment in the U.S. and distributing it to children who live in the favelas, or slums, of Brazilian cities and other impoverished areas around the world.
Beat the Streets
Billy Hildbold and Larren Nashelsky arecurrently representing Beat the Streets, anonprofit organization that provides leadershipand direction to the wrestling community byestablishing and maintaining amateur wrestlingteams and facilities throughout New York City.Beat the Streets not only provides opportunitiesfor the youth of New York City, but training andteaching lessons for wrestling coaches as well.MoFo initially became involved with Beat theStreets when the firm helped draft an employeehandbook for the company, but has now expandedits services and is analyzing contracts and taxissues related to monetary obligations in supportof Beat the Streets’ annual gala.
Sanctuary for Families
First year associate Jessica Arett is among the eight New York lawyers who just began work on U visa cases referred by the group Sanctuary for Families. She will be helping an immigrant
victim of domestic violence apply for legal status under a special program that Congress created so battered spouses can escape abuse without fear of deportation.
Her Justice
Melissa Hager handles a divorce case for a low-income victim of domestic violence – not one of our usual pro bono matters – through Her Justice (formerly In Motion). Now close to completion, the case has gone on for several years because our client lived in a house owned by her abusive husband’s relatives and had few options for relocation.
Lawyers’ Committee for Civil Rights
Kristin Hiensch is waiting to find out whether she won asylum in the U.S. for a refugee from Mongolia. Our client fled domestic violence in her home country and now lives in California with her children. The matter was referred by the Lawyers’ Committee for Civil Rights under Law of the San Francisco Bay Area.
Social Accountability International
Kathleen Schaaf brought in an interesting new pro bono client, Social Accountability International – a standard-setting group that helps companies ensure fair labor standards throughout their supply chains.
New York City Family Court
Kathleen Schaaf provided legal advice to multiple unrepresented litigants in the New York City Family Court.
Proposition 8 Challenge
Vince Novak worked with litigation partner Ruth Borenstein on an amicus brief filed in the United States Supreme Court in the Proposition
18 Business Restructuring + Insolvency Year-End Review 2013
8 challenge. The brief, written on behalf of former Legal Advisor of the Department of State, Harold Koh and other international law experts, emphasized recent developments in international law that have created a “global progression towards marriage equality.”
McCarton School
For the past several years, MoFo has represented the McCarton School, which provides an educational program for children with autistic spectrum disorder by using an integrated one-to-one model of therapy. In 2013, Peter Dopsch and Samantha Martin advised the school on a variety of matters, and in particular, they prepared and submitted a proposed amendment to the school’s charter to permit the school to offer transitional classes for students between the ages of 18 and 21. The New York State Education Department Board of Regents will consider the proposal in early 2014.
19 Business Restructuring + Insolvency Year-End Review 2013
AWARDS + RECOGNITION
CHAMBERS USACiting “another extraordinary year,” and our “great strides in the bankruptcy and restructuring industry with a steady flow of extremely high-profile engagements,” MoFo was named the 2013 Bankruptcy Firm of the Year at the Chambers USA Awards.
In its 2013 guide, Chambers calls MoFo’s Business Restructuring + Insolvency Group “a fixture among the major players in the industry.”
FinAnCiAl TiMES U.S. INNOVATIVE LAWYERS REpORTThe FT recognized MoFo for its work on both the Residential Capital bankruptcy proceedings and the MF Global bankruptcy settlement in the 2013 edition of its U.S. Innovative Lawyers Report, a special publication recognizing legal counsel and firms who have “brought original thinking and practices to business issues in the U.S.”
AMERiCAn lAwyER GLOBAL LEGAL AWARDSThe American Lawyer gave the award for Global Finance Deal of the Year, Private Restructuring to MoFo for its work on MF Global’s global bankruptcy. The inaugural awards “honor the deals or disputes of 2012 that best exemplify the challenges of transnational legal practice.” Am Law wrote, “MoFo assembled a multidisciplinary, transatlantic team, which as part of its efforts filed over 100 claims seeking more than $3 billion from MF Global affiliates and subsidiaries….This was a logistical and equity nightmare – more than 1.6 open futures and options positions had to be closed spread over 100 exchanges.”
TURNAROUNDS & WORKOUTSGary Lee, chair of MoFo’s Business Restructuring + Insolvency Group, was named an Outstanding Restructuring Lawyer for 2013 in the December issue of Turnarounds & Workouts. Only 12 lawyers nationwide received this honor. This is his second consecutive year on the list.
lEgAl 500 US Again recognizing MoFo as a leading firm in the 2013 edition of Legal 500 US noting that MoFo’s lawyers are “extremely commercially driven and focused on the right issues” and “have developed top level expertise in insurance, insolvency, real estate and mortgage litigation, among other areas of bankruptcy.”
lAw360 Law360 named Gary Lee one of its 2013 MVPs, lawyers whose achievements in the past year have set a new standard.
20 Business Restructuring + Insolvency Year-End Review 2013
G. Larry [email protected]
Lorenzo [email protected]
Gary S. LeeGroup Co-ChairFinance Dept. [email protected]
Todd M. [email protected]
Brett H. MillerNew York Managing [email protected]
Adam A. Lewis Senior [email protected]
OUR U.S. TEAm
Kathleen E. SchaafSenior Of [email protected]
Alexandra S. BarrageOf Counsel [email protected]
Melissa A. HagerOf [email protected]
Jennifer L. Marines Of [email protected]
John A. Pintarelli Of [email protected]
Erica J. [email protected]
Vincent J. [email protected]
Meryl L. [email protected]
Jonathan [email protected]
Kristin A. [email protected]
Larren M. NashelskyFirm [email protected]
Anthony [email protected]
Norman S. RosenbaumPartner [email protected]
James M. PeckGroup [email protected]
James A. [email protected]
Stefan W. [email protected]
Jordan A. Wishnew Of [email protected]
Craig A. [email protected]
Daniel J. [email protected]
Jessica J. [email protected]
Lacey LakenSr. Business Development [email protected]
Stacy L. Molison [email protected]
Samantha Martin [email protected]
William M. HildboldAssociate [email protected]
21 Business Restructuring + Insolvency Year-End Review 2013
OUR INTERNATIONAL TEAm
Peter J. [email protected]
Jeremy C. Jennings-Mares [email protected]
John [email protected]
Keily Blair [email protected]
Duncan Grieve [email protected]
Lewis Gavin Lee [email protected]
James Lloyd [email protected]
Kevin Roberts [email protected]
Jörg Meißner [email protected]
Thomas Keul [email protected]
Howard Morris Head of BR+I [email protected]
Jonathan Edward Wheeler [email protected]
Tadashi Wada Senior Of [email protected]
Dale [email protected]
Katsuhiko [email protected]
Afia [email protected]
© 2014 Morrison & Foerster LLP, mofo.comPrior results do not guarantee a similar outcome.