All items from Basis Points

The game is tied with three seconds to play in regulation: an inbounds pass, one dribble—and a long shot at the buzzer. It’s the drama we love and expect this month, but whether the result is the thrill of victory or the agony of defeat depends not only on whether the shot goes in but also whether it leaves the shooter’s hands before the buzzer sounds.1 Analogous madness arose this March in a recent complaint filed against an ad hoc group of hedge fund noteholders (the “Noteholders”) in Motors Liquidation Company GUC Trust v. Appaloosa Investment Limited Partnership (In re Motors Liquidation Co.), Case No. 09-50026 (REG) (click here to read the Complaint) before the United States Bankruptcy Court for the Southern District of New York. Plaintiff (a trust established in connection with General Motors’ second amended Chapter 11 plan confirmed in March 2011) alleged that the Noteholders entered into a litigation settlement agreement (the “Settlement Agreement”) with General Motors Corporation (“Old GM”) and Canadian subsidiaries of Old GM that, while back-dated prepetition, was actually consummated postpetition. As a result, Plaintiff asserted, the Settlement Agreement should be reviewed by the Bankruptcy Court as a postpetition transaction and, as a result of such review, held to be inappropriate and sanctionable.

The worldwide press has been humming that General Motors has finally taken back the pole position from Toyota as the worldwide sales leader. In contrast, stories about the General Motors bankruptcy have mostly stalled since the automaker’s plan of liquidation took effect last March. Until now. Late last week, the Bankruptcy Court for the Southern District of New York sent to the junkyard an adversary complaint filed by potential class claimants seeking partial revocation of the plan confirmation order under section 1144 of the Bankruptcy Code based on allegations that the confirmation order was fraudulently procured. In Morgenstein v. Motors Liquidation Co. (In re Motors Liquidation Co.), Case No. 11-9409 (Bankr. S.D.N.Y. Jan. 18, 2012), Judge Gerber took the air out of the plaintiffs’ tires, holding that bankruptcy courts cannot partially revoke a confirmation order. The Court also stopped the plaintiffs’ fraud allegations dead in their tracks.
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In an Order issued yesterday by the Bankruptcy Court for the Southern District of Texas in the Omega Navigation Enterprises, Inc. (Omega) chapter 11 cases, Judge Karen Brown has denied motions to dismiss or convert Omega’s chapter 11 cases or for relief from stay filed by Omega’s Senior Lenders and supported by Omega’s Junior Lenders and Unsecured Creditors’ Committee. In the view of Lloyd’s List, a leading industry publication:
Omega Navigation Enterprises has scored a landmark victory in its Chapter 11 battle against senior lender HSH Nordbank in Houston, setting an extraordinary precedent for other foreign shipping companies seeking refuge from unpaid banks through the US bankruptcy courts.
The full article from Lloyd’s List can be found HERE.

After four long years, Australia-based Centro Properties Group (“CNP”) has consummated a global restructuring that combines a debt-for-equity swap with an aggregation of its assets into a new real estate investment trust, Centro Retail Australia (“CRF”). Bracewell & Giuliani was first engaged by Centro’s private placement noteholders in December 2007. As the restructuring progressed Bracewell’s role expanded to becoming lead counsel for CNP’s entire international lending syndicate consisting of more than 90 distressed debt investors, institutional investors and commercial banks (the “Senior Lenders”).Today is the effective date of the aggregation and CRF, which holds more than $4.4 billion of quality Australian retail properties, interests in various real estate investment syndicates and an internal property management business, will begin trading on the ASX. The last step in the restructuring process will take place early next week with the conversion of the Senior Lenders’ $3 billion of senior debt into the majority of the equity of CRF. Widely described in the press as one of the most complex and innovative restructurings in Australia, the CNP restructuring is a hard fought victory for all involved, demonstrating the viability of debt-for-equity transactions in Australia, the willingness of Australian courts to consider novel schemes of arrangement and the ability of the Australian restructuring regime to accommodate pre-packaged restructuring transactions.