BarbriSFCourseDetails

Course Details

This CLE course will discuss strategies that borrowers are increasingly using to create liquidity, delay maturities, and relieve covenant pressure to prevent bankruptcy while also allowing certain creditors to maintain control and preferred priority if bankruptcy ensues. The program will discuss how these transactions work; how they compare with post-petition financing, roll-ups, and priming; their vulnerabilities in bankruptcy; and how different constituencies can respond.

Faculty

Description

To address both liquidity and cash issues, debtors, together with cooperative creditors, are more frequently using transactions usually seen in post-petition DIP financing, such as roll-ups or roll-overs and priming liens, in the pre-bankruptcy period to secure cash and/or liquidity as well as to obtain relief from maturity dates covenants.

In "drop-down" transactions, the borrower transfers assets to new subsidiaries, which then borrows against them, putting them beyond lenders who had assumed those assets secured their liens. In "uptiering" transactions, existing lenders "roll up" their existing debt to a super-priority senior position ensuring they are in control of future restructuring in or out of bankruptcy. Financings for Revlon, Tri Mark, J.Crew, Travelport, Neiman Marcus, and PetSmart are some examples of these priming transactions.

Understanding how these transactions work, what steps those creditors excluded from these leaps in priority can consider, how these transactions fare in bankruptcy, and remedies for creditors are critical for both bankruptcy and finance attorneys.

Listen as this renowned panel guides counsel through how these historically Chapter 11 transactions are being used in pre-Chapter 11 scenarios, the challenges they face, and how they fare in bankruptcy.

Outline

  1. Rise of liability management transactions
  2. Drop-down financing
  3. Uptiering transactions
  4. Relevant cases
  5. Impact on reorganization and confirmation

Benefits

The panel will review these and other key issues:

  • How do pre-filing uptiering and drop-down transactions affect Chapter 11?
  • Are liability management transactions vulnerable to fraudulent transfer claims?
  • Are liability management transactions only relevant in participation?
  • Could a Chapter 11 plan release claims between creditors?