Business Reorganization and Creditors' Rights
Patterson Belknap offers clients significant skills and experience in the debtor-creditor field. We represent fiduciaries, financial institutions, creditors’ committees, developers, manufacturers, licensors, and other businesses, partnerships, individuals, and foreign and domestic government agencies in bankruptcy matters and bankruptcy-related litigation.
Our diverse international practice spans a broad range of industries. It includes counseling clients on transaction structures designed to reduce bankruptcy risks and negotiating workouts and restructurings outside the courtroom. Our attorneys also represent clients with respect to pre-packaged and pre-negotiated bankruptcy cases.
Our attorneys speak regularly on issues relating to debtor-creditor rights and partners David W. Dykhouse and Daniel A. Lownethal are co-presenters of the PLI Program A Complete 180: 90 Days Prior to and 90 Days After A Corporate Customer Files Bankruptcy which discusses important actions within the 90-day period before and the 90-day period after a business entity files for bankruptcy protection.
We work together with clients on matters including:
Chapter 11 Proceedings
Patterson Belknap plays a variety of roles in many of the largest corporate reorganization proceedings, including representation of secured and unsecured creditors, debtors and debtors-in-possession, landlords and tenants, creditors’ committees and court-appointed trustees. A few examples of the firm’s diverse work follow:
Secured and Unsecured Creditor Representation
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Representing a manufacturer of sophisticated telephone switches in several reorganization proceedings involving interstate telecommunications companies.
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Representing one of the nation’s largest cosmetics and fragrance manufacturers in the Chapter 11 reorganization cases of major retailers.
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Representing a major plastics manufacturer as the largest unsecured creditor in the Chapter 11 reorganization of a principal competitor.
Debtor-in-Possession Finance
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Negotiation of several post-petition lending arrangements in connection with the representation of debtors-in-possession; review of debtor-in-possession finance arrangements on behalf of a creditors’ committee and individual creditors.
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Frequent litigation and negotiation of cash collateral orders in Chapter 11 cases.
Debtors-in-Possession
Creditors’ Committees
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Representation of an official creditors’ committee composed of media companies in major Chapter 11 case of a barter company.
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Representation of an official creditors’ committee in Chapter 11 case of a manufacturer and distributor in the fragrance industry.
Workout of Loans to Troubled Companies
Patterson Belknap represents secured lenders and borrowers in connection with the restructuring of lending arrangements involving financially illiquid or distressed companies. Recent examples of such work include:
- Advising and representing a secured lender in the restructuring of its credit facilities with a series of related agribusinesses in Colorado, including the sale of real property and the liquidation of other collateral;
- Advising foreign banks in the modification of revolving credit facilities to a troubled commodities dealer in order to avoid bankruptcy proceedings; and
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Advising a foreign bank with respect to the revision of letter of credit and other financial arrangements with a troubled foreign exchange entrepreneur.
Litigation
Patterson Belknap is particularly known for its active and effective litigation in bankruptcy court. It represents several major corporations in preference and related bankruptcy litigation on a coast-to-coast basis, but concentrates in handling complex litigation arising from bankruptcy cases. Noteworthy recent matters include:
- Representation of a major financial institution in a negligence suit against a nationwide accounting firm upon which it relied in lending to a bankrupt manufacturer.
- Representation of a nationwide accounting firm in litigation brought by financial institutions which relied on it in lending to a bankrupt commodities trader.
- Representation of a large foreign bank in its efforts to avoid fraudulent conveyance through the use of Liechtenstein trusts and similar asset protection vehicle.
- Representing a large real estate developer in bankruptcy proceedings commenced by the developer’s foreign partner. This matter, which was reported extensively in the local and national press and involves one of the most important real estate projects in Manhattan, was litigated vigorously in bankruptcy court and in arbitration proceedings.
- Defending a group of foreign corporations from bankruptcy petitions filed without authorization in New York. In addition to obtaining prompt dismissal of the petitions, the firm obtained the largest sanctions award ever assessed by a bankruptcy court.
- Representing U.S. subsidiaries of a major foreign defense and telecommunications manufacturer in the Bicoastal (formerly Singer) Chapter 11 case and settlement on terms described by the Court as the most favorable obtained by any creditor.
Intellectual Property
Patterson Belknap lawyers are skilled in representing clients in cases where licensing or technology transfer arrangements are likely to be affected by the counterparty’s insolvency and stand at the forefront of this practice area. Specific examples of the firm’s involvement include:
- Representing a major trademark licensor in an aggressively litigated effort by a Chapter 11 debtor to modify its license arrangements for a prestigious clothing line.
- Regularly counseling clients in licensing negotiations with distressed or non-creditworthy parties.
Acquisition of Distressed Companies
The firm has regularly been engaged to handle the acquisition of distressed companies or their assets both in and out of Chapter 11 proceedings. Exemplary matters include:
- Representation of two media companies in their efforts to acquire the Financial News Network through Chapter 11 proceedings.
- Acquisition by a real estate and retailing organization of a major independent oil refiner in Chapter 11 through stock purchase from secured creditors.
- Acquisition by an investment company of a controlling interest in a defense aviation company and related businesses outside of Chapter 11.
- Representation of a major pharmaceutical manufacturer in the acquisition of the Mexican and U.S. manufacturing assets of a Chapter 11 debtor.
Investigations
Patterson Belknap, well known for its investigative work, serves a substantial number of financial institutions and major corporations with sensitive internal and external matters requiring independent scrutiny. This work extends into the bankruptcy and debtor-creditor area. The firm’s attorneys have frequently been called upon to perform investigations and to act swiftly to maximize recovery on behalf of creditors, creditors’ committees or trustees in bankruptcies and workout cases involving allegations of fraud and embezzlement.
A significant number of Patterson Belknap’s attorneys were formerly associated with prosecutors’ offices, and the firm takes great pride in the fact that many prosecutors in New York are its alumni. Representative recent matters include:
- Investigation of multi-million dollar embezzlement and misappropriation by financial officer of an entertainment company and diversified efforts to recover embezzled and misappropriated assets in a Chapter 11 case; related civil litigation resulting in significant recovery from third party whose negligence contributed to loss.
- Investigation of embezzlement by senior financial officer of a manufacturing company resulting in restitution agreement involving other creditor interests.
- Advising securities firm which suffered heavy losses as a result of unauthorized investments by senior executives.
Transactions with Distressed Parties
Patterson Belknap regularly represents parties engaging in transactions (particularly financings, purchases and sales, and franchising) with distressed companies. The firm offers advice on structuring transactions to avoid or minimize risks resulting from the subsequent insolvency or bankruptcy of the distressed party. Recent examples include:
- Advising several of the nation’s largest pharmaceutical manufacturers on structuring joint ventures with distressed or non-creditworthy companies.
- Providing advice on closing out commodities transactions with a major financially troubled trading company.
- Providing guidance to foreign exporters and their banks and credit insurers concerning transactions with distressed U.S. Companies.
Real Estate Workouts and Reorganizations
A large portion of Patterson Belknap’s debtor-creditor practice has been dedicated to real estate projects. The firm has regularly represented secured lenders, developers and the FDIC in efforts to restructure troubled real estate projects and regularly handles foreclosure and related bankruptcy litigation. In late 1991 Patterson Belknap lawyers handled the first truly “prepackaged” real estate reorganization in the Southern District of New York, confirming the transfer of a significant midtown Manhattan property within several weeks after the filing of a bankruptcy petition. Some other noteworthy matters include:
- Representation of a large North American banking corporation in prosecution of secured and unsecured claims against a major New York real estate partnership and related individuals, in both state and federal courts.
- Representation of numerous single-asset borrowers with significant commercial real estate in New York, including the Architects’ & Designers’ Building, the Designers’ & Decorators’ Building, 275 Madison Avenue, 633 Third Avenue and 909 Third Avenue, as well as 114 Sansome Street in San Francisco.
- Representation of a major foreign bank in workout of over 13 single-asset borrowers with shopping centers and other commercial properties located throughout the United States.
- Restructuring the $200 million Americas Tower project in Manhattan in a manner designed to maximize tax benefits for the parties.
- Representation of secured lenders in restructuring of major commercial and residential developments in the Northeast.
- Representation of an investor group in the workout and reorganization proceedings surrounding the New York real estate interests of Joseph Neumann.
- Representing the FDIC, as successor to financial institutions, in workout discussions and later litigation surrounding commercial and residential real estate developments in Texas and New York.
- Obtaining a rarely granted order dismissing a bankruptcy case filed in New York by a developer on the eve of foreclosure.
- Representation of an investor/developer in an attempted debt restructuring concerning a major North Carolina shopping center.
- Representation of an investor/developer in a bankruptcy court struggle with its financial partner over the restructuring of a major midtown Manhattan property.
- Representation of a major New York bank as an investor in the restructuring of significant midtown Manhattan properties.
Trusteeships and State Court Proceedings
Members of the firm have often been called upon by courts and Department of Justice officials to serve as trustees or receivers in particularly difficult cases, especially those involving allegations of fraud or wrongdoing by management. In one such case, the firm accomplished what the court described as “remarkable results” through its “extraordinary efforts.” Patterson Belknap has regularly represented secured and unsecured creditors and trustees in connection with liquidation proceedings and has broad familiarity with issues arising in such proceedings including asset sales, auctions and determination of priorities. The firm also represents creditors in connection with comparable proceedings under state law including equity receiverships and assignments for the benefit of creditors.
ERISA and Bankruptcy
Patterson Belknap has significant experience with ERISA, and its lawyers have been highly active in matters involving the intersection of ERISA and the Bankruptcy Code. The firm has regularly represented ERISA fiduciaries and fiduciaries under other employee benefit arrangements in questions arising from the bankruptcy or reorganization of an employer or beneficiary. Patterson Belknap recently submitted an amicus brief on behalf of two major ERISA organizations in a major appeal involving ERISA and bankruptcy issues.
For additional information regarding our Debtor-Creditor practice area, please contact
David W. Dykhouse.