by Jonathan D. Canfield
Stroock & Stroock & Lavan LLP; New York
Meryl L. Rothchild
Stroock & Stroock & Lavan LLP; New York
Thomas J. Shiah[1]
Stroock & Stroock & Lavan LLP; New York
In the modern global economy, there are numerous companies (for purposes of this article, each is referred to as a “foreign entity”) that, despite having a majority of their principal assets, operations, employees and/or management located outside of the United States, rely on the U.S. court system to adjudicate their issues. As economic markets shift, or as a foreign entity otherwise finds itself needing to restructure its debt or right-size its capital structure, complex cross-border jurisdictional and insolvency issues often arise, even in circumstances where U.S.-based investors are not a principal source of capital.
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by David H. Conaway
Shumaker, Loop & Kendrick, LLP; Charlotte, N.C.
American Airlines’ chapter 11 filing on Nov. 29, 2011, may signal the reality that a formal insolvency proceeding is part of the airline industry business cycle. The U.S. airline industry has experienced substantial consolidation, and many carriers have reorganized in chapter 11. The U.S.’s largest carriers, United/Continental, Delta/Northwest and American Airlines, each filed for chapter 11 at least once. Southwest Airlines is the only major U.S. carrier that has not filed for chapter 11 protection. Typically, a primary motivator for an airline bankruptcy is to cut defined benefit pension plans (“pension plans”) for employees and/or to reject or modify collective bargaining agreements. Although jet fuel spot prices have risen 110 percent from January 2001 to December 2006, and 133 percent from January 2007 to July 2008, there is little airlines can do to reduce cost of this essential commodity, other than pass along those price increases to the passengers in the form of various surcharges.
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Baker & McKenzie LLP, Toronto
Frank Spizzirri
Baker & McKenzie LLP, Toronto
Lydia Salvi
Baker & McKenzie LLP, Toronto
Alex C. Roberts
Baker & McKenzie LLP, Toronto
Shaheen Karolia
Baker & McKenzie LLP, Toronto
Although sometime has passed since the Ontario Court of Appeal surprised the pension, bankruptcy and insolvency community in Canada with its decision in Re Indalex Limited[1] in April 2011, the impact has remained at the forefront for Canadian and cross-border attorneys dealing with pension deficiencies and priority rules in Companies’ Creditor Arrangement Act (CCAA) restructurings. The court of appeal ruled that beneficiaries under salaried and executive defined benefit-pension plans were entitled to the proceeds of sale of the company’s assets to cover shortfalls in their under-funded pension plans in priority to Indalex’s debtor-in-possession (DIP) lender. Now that the Supreme Court of Canada has agreed to hear the appeal, secured lenders and other stakeholders should continue to monitor their interests when dealing with a (distressed) company with a defined benefit-pension plan in a deficit position until the case is heard, most likely in late 2012 or early 2013. Further, if the decision is not overturned, stakeholders should be prepared for life after Indalex.
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ABI has hosted two conferences recently that have provided the committee with relevant educational materials. First, the Caribbean Insolvency Symposium was held in San Juan, Puerto Rico on February 2 - 4, 2012. Speakers included a variety of judges, attorneys and consultants, who presented sessions such as "Living Wills: A new paradigm to address systemic risk" and "Beyond the Explosions: Environmental liability, 363 Sales, and insurance issues in Caribbean Petroleum." Click here to view materials from the 2012 Caribbean Insolvency Symposium.
VALCON2012 celebrated its 25th anniversary in Las Vegas on February 22 - 24, 2012. The materials for the session titled "Current Conditions and Outlook on Global Sovereign and Corporate Credit Markets" included a plethora of charts and grafts to reflect the findings on the recent global and corporate markets. Panelists discussed topics such as the Altman Z-Score+, risks moving forward and default rate forecasting. The session was led by Edward I. Altman of the New York University Stern School of Business in New York. Click here to view educational materials from "Current Conditions and Outlook on Global Sovereign and Corporate Credit Markets."
Click here to view all materials related to the International Committee.
