Business Restructuring + Insolvency

Consistently recognized as industry leaders by Chambers USA, Legal 500 US, Law360, and The Deal, among others, MoFo’s Business Restructuring + Insolvency Group counsels clients around the globe on the issues that arise in relation to corporate distress, including some of the most significant bankruptcy cases in recent history.

We advise debtors, creditors, creditors’ committees, ad hoc committees, secured lenders, and specialist investors. The breadth of our practice allows us to find solutions for a broad range of participants in distressed markets and help them navigate their most complex issues.

Our capabilities include:

• Cross-border insolvencies
• Representation of ad hoc and official creditors’ committees
• Distressed real estate
• Failing hedge funds
• Insolvency issues involving key intellectual property
• U.S. municipal insolvencies
• Debt trading
• Restructuring financial institutions
• Bankruptcy mediation

Cross-Border Insolvencies

The members of our team, including leaders in professional organizations promoting the development and reform of restructuring law, have advised clients on insolvency matters spanning multiple jurisdictions. Our lawyers have been involved in, and continue to advise on, significant multijurisdictional cases that span:

This experience, along with our familiarity with global approaches to corporate distress, courts, and insolvency professionals, enables us to navigate even the most complex matters.

We regularly advise multinational institutions on:

• Restructuring or liquidation of their businesses
• Formulation of strategies for managing relationships with parties facing insolvency
• Resolution of cross-border claims and litigation
• Strategic and contingency planning

Our cross-border experience frequently includes the representation of institutions seeking recognition of insolvency proceedings in other countries. We have substantial experience in the United States with chapter 15 of the U.S. Bankruptcy Code and its UK counterpart, the Cross-Border Insolvency Regulations, both of which incorporate the UNCITRAL Model Law on Cross-Border Insolvency. Our firm’s involvement in cross-border restructurings during chapter 15’s peak years of evolution enables our professionals to provide an unrivaled and unique understanding of the issues that non U.S. global entities face when seeking relief in the United States.

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Representation Of Ad Hoc And Official Creditors’ Committees

While many firms can represent a single creditor with a single interest, clients frequently call on us to represent committees consisting of multiple creditors with numerous, and sometimes divergent, interests. We have considerable experience covering informal and ad hoc committees, as well as formal committees in insolvency proceedings.

We have represented official committees in many high-profile U.S. chapter 11 reorganization proceedings involving companies with complex capital structures and a diverse creditor constituency that includes institutional note holders, trade creditors, investors, labor unions, retirees, and customers. Our experience representing official committees spans several industries and commercial sectors, including:

• Telecommunications
• Energy
• Manufacturing
• Airlines and aviation
• Commercial and residential real estate development
• Business-to-business advertising

While many of our cases involve debtors with annual revenues of several billion U.S. dollars, we use careful and efficient staffing models that allow us to help companies with significantly smaller revenues.

Whenever needed, our lawyers call on colleagues with other principal areas of focus, including capital markets, derivatives, intellectual property, labor, project finance, and real estate. We also have a deep bench of high‑stakes litigators and trial lawyers ready, if our clients’ circumstances call for those services.

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Failing Hedge Funds

We represent liquidators, major creditors, and investors in high-profile hedge fund insolvencies. We regularly advise liquidators and other parties-in-interest on tracing, liquidating, and recovering assets of failed domestic and foreign hedge funds. Our representation of hedge funds and their creditors involves designing and implementing cross-border litigation strategies. This experience has enabled our lawyers to be involved in shaping the law under chapter 15 of the U.S. Bankruptcy Code.

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Insolvency Issues Involving Key Intellectual Property

As a preeminent IP firm with a similarly distinguished restructuring practice, we offer clients deep experience with key IP in insolvency matters. Our clients are involved in cutting-edge IP matters in the United States, Japan, Europe, China, and many other jurisdictions. Our restructuring team works with lawyers across our relevant Patent, Corporate, Technology Transactions, and Litigation Groups to understand the nature of our clients’ interests and develop creative solutions to protect those interests, whether our clients are facing their own financial hardships, dealing with a counterparty insolvency, or protecting against a potential insolvency event.

We also have experience advising clients on IP rights in chapter 11 cases and maximizing recoveries on their property rights in bankruptcy. We provide clients with a full complement of services, from general advice on how to “bankruptcy proof” a license or contract, to engaging in complex litigation to protect valuable property rights.

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U.S. Municipal Insolvencies

We have assembled a multidisciplinary team with the unique experience in U.S. municipal insolvencies required to resolve key issues and disputes in chapter 9 cases related to this challenging area of law, including extensive experience representing creditors. We also represent municipal entities, including:

• Cities
• States
• Airport authorities
• Ports
• Retirement systems
• Water districts

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Debt Trading

Our skilled debt-trading practice is devoted to representing clients engaged in the secondary market trading of commercial loans, claims, and other debt assets. We provide regulatory and strategic counsel to banks, asset managers, hedge funds, and other market participants in every type of debt-trading transaction, including:

• Par and distressed loan trades
• Restructured equity transactions
• Trade-claims trades
• Derivatives transfers
• Loan securitizations
• Portfolio transfers (e.g., pursuant to auctions or securitization transactions)

Our clients include investment banks, commission brokers, commercial banks, fund and asset managers, hedge funds, and other investors in commercial loans. In addition to representing many U.S.-based corporations, we represent several clients in connection with trades of loans and claims owed by European, Latin American, Asian, and other non-U.S. obligors.

Our restructuring and bankruptcy team is closely integrated with the Financial Transactions Group, which includes lawyers who have a wealth of experience in the areas of banking, securities, structured finance, and derivatives, all of which are essential to formal and informal financial restructuring work. Lawyers in the firm’s insolvency, tax, ERISA, securities, and other practices are familiar with the unique issues associated with debt trades, and assist with trading matters as needed.

Examples of our debt-trading experience include:

• Providing regulatory advice regarding bank, securities, and investment-adviser issues to regulated institutions that engage in loan trading
• Structuring investment funds and debt trades to comply with prohibited transaction rules under ERISA
• Advising clients regarding credit documentation and related transfer documentation, collateral securing debt, bankruptcy court filings, and workouts and restructurings
• Advising clients regarding fraudulent conveyance, preferential transfer, lender liability, and disgorgement risks
• Resolving disputes arising from failed trades

We are also active members of the Loan Syndications and Trading Association (LSTA), the trade association for the debt-trading industry. Several of our lawyers regularly participate on committees established by the LSTA to promote the liquidity and efficiency of the market.

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Restructuring Financial Institutions

U.S. and non U.S. global structures now support a complex matrix of rules governing struggling financial institutions. We have the experience and reach to advise stakeholders in these demanding situations. Our group represents clients impacted during these times, including:

• Governmental entities
• Money center banks
• Investment banks
• Financial institutions
• Par and distressed investors
• Shareholders

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Bankruptcy Mediation

Our group features a bankruptcy mediation practice not often found at peer firms, acting on large-scale mediations in industries including retail and apparel, media, and oil and gas.

Experience

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Representative Experience

• Official committee of unsecured creditors of Windstream Holdings, Inc. and its affiliated debtors in their chapter 11 case. Windstream is a leading provider of advanced network communications, technology, broadband, security, entertainment, and core-transport solutions to both consumer and business customers across the United States. Windstream had approximately $5.6 billion in prepetition obligations at the time of its filing.
• Official committee of unsecured creditors of Westmoreland Coal Company. Westmoreland is the sixth-largest coal-mining enterprise in North America, and filed for chapter 11 in the Bankruptcy Court for the Southern District of Texas. After conducting an exhaustive investigation to reveal unencumbered assets and following weeks of negotiations with the company and the company’s secured lenders, the Committee supported independent plan processes for two distinct debtor groups that kept the company operating, preserved jobs and pensions, and provided value for unsecured creditors.
• Ad hoc group of constitutional bondholders of the Commonwealth of Puerto Rico in connection with the first restructuring proceeding under the newly enacted Puerto Rico Oversight, Management, and Economic Stability Act. Working in coordination with other holders of constitutional debt, the ad hoc group has engaged in targeted litigation and efforts to negotiate a plan for the Commonwealth’s restructuring, while simultaneously defending attempts to invalidate more than $6 billion of the Commonwealth’s $18 billion of outstanding constitutional debt. 
• Various creditors in the ongoing chapter 11 bankruptcy cases of Sears and its affiliated debtors (collectively, “Sears”). At the time of its chapter 11 filing, Sears was operating over 680 retail stores in 49 states, as well as in Guam, Puerto Rico, and the U.S. Virgin Islands under the Sears^® and Kmart^® brands. Sears entered chapter 11 in the Southern District of New York after struggling with liquidity issues that limited its ability to invest in and grow its business. We also acted as counsel to non-debtor affiliates of Sears Holding Company that held 130 prime real estate properties that served as collateral for approximately $600 million in secured loans. These properties were transferred to Transform Holdco LLC as the successful bidder on the Sears assets in a court-approved sale of substantially all of the assets of Sears Holding Company. 
• Ad hoc group of secured and unsecured noteholders in connection with the chapter 11 prepackaged plan of Southeastern Grocers LLC – one of the largest conventional supermarkets in the United States, operating under the Winn-Dixie, BI-LO, Harveys, and Fresco y Más banners – successfully rationalizing its 704-store footprint and restructuring more than $1.5 billion in debt and other obligations, paying unsecured trade creditors in full.
• Various bondholders, creditors, and parties-in-interest in the ongoing chapter 11 bankruptcy cases of California’s largest utility, Pacific Gas & Electric (PG&E). At the time of its chapter 11 filing, PG&E faced over $30 billion in liabilities related to the 2017 and 2018 California wildfires, along with $24 billion in outstanding funded debt.
• Official committee of unsecured creditors of aerospace manufacturer The NORDAM Group, Inc. and affiliated debtors (collectively, “NORDAM”). NORDAM filed for chapter 11 following a liquidity crisis caused primarily by a five-year dispute with Pratt & Whitney Canada Corporation over a long-term development and manufacturing agreement and program for the PW800 nacelle system used in Gulfstream Aerospace Corp. (“Gulfstream”) G500 and G600 aircraft. At the time of filing, NORDAM had approximately $286 million in funded debt. The committee supported the debtors’ decision to sell NORDAM’s interest in the program to Gulfstream, and thereafter negotiated a plan of reorganization that provided for an equity investment and ultimately payment of all unsecured claims in full with interest.
• Ad hoc group of senior secured noteholders for both Sanchez Energy Corporation and EP Energy.
• Official committee of unsecured creditors of supermarket retailer Tops Holding II Corporation and affiliates in their chapter 11 cases. The company filed for chapter 11 with over $748 million in funded indebtedness and substantial pension liabilities.
• Official committee of unsecured creditors of telecom company Avaya Inc. and its affiliated debtors. Avaya had more than $6 billion of secured debt at the time of its filing and was saddled with significant pension underfunding liabilities for its domestic and certain foreign affiliates. This was among the largest bankruptcy cases of 2017.
• Official committee of unsecured creditors of 21st Century Oncology Holdings, Inc., the largest global provider of integrated cancer care services. At the time of its filing, 21st Century Oncology had more than $1.1 billion of prepetition funded debt that it was seeking to restructure through its chapter 11 cases.
• Real Industry, Inc., Real Alloy Recycling, Inc., and their affiliated debtors in their chapter 11 cases. Real Industry is a holding company with approximately $1 billion in tax attributes. Real Alloy, a subsidiary of Real Industry, is a large-scale recycler of aluminum, with operations throughout the United States, Canada, Mexico, and Europe. The debtors collectively filed for chapter 11 to restructure approximately $400 million in funded debt obligations and approximately $75 million in other obligations. Real Industry’s chapter 11 plan, which preserved its tax attributes, went effective, and Real Alloy closed a sale of all of its assets and operations, preserving 2,000 jobs and critical business relationships.
• Maxus Energy Corporation and four affiliated debtors in their chapter 11 cases, which addressed over $12 billion in claims, predominantly in connection with environmental liability relating to the country’s largest Superfund site: the Passaic River and related bodies of water. The Maxus chapter 11 cases concluded following confirmation of an innovative chapter 11 plan supported by over 99% of creditors.
• Official committee of unsecured creditors of Peabody Energy, the world’s largest privately owned coal producer, and 153 of its subsidiaries, which collectively held $10.1 billion in prepetition debt. In the bankruptcy court, our team⁠ succeeded in securing material improvements to unsecured-creditor recoveries in the confirmed plan of reorganization. We successfully defended the plan, which provided substantial recoveries to both secured and unsecured creditors, in the district court against challenges by the hold-out creditors and again in the Eighth Circuit.
• Hovensa LLC, once owner of one of the 10 largest oil refineries in the world, in its chapter 11 case. At the time of its bankruptcy filing, Hovensa had approximately $2 billion in prepetition indebtedness, exclusive of its significant legacy liabilities, primarily in the form of environmental obligations, pension obligations, and retiree benefits.
• Official committee of TCEH unsecured creditors in the chapter 11 cases of Texas power company Energy Future Holdings Corp. and its affiliates. This is the tenth-largest bankruptcy in U.S. history, with the debtors liable for approximately $40 billion in debt.
• Residential Capital, LLC (“ResCap”), one of the largest real estate finance companies in the world, in its chapter 11 case. ResCap was the firstfinancial services company to successfully continue its regulated business operations in bankruptcy and be sold as a going concern.
• Official committee of unsecured creditors in the chapter 11 case of Ambac Financial Group. This was one of the largest financial services bankruptcies ever, and it is believed to be the first-ever partial rehabilitation in the United States.
• Official committee of unsecured creditors in the chapter 11 case of the Los Angeles Dodgers, in which the unsecured creditors received a 100% cash recovery under the plan in what is the largest and most successful restructuring of a sports franchise in U.S. history.
• Two of the largest banks in Iceland during the Icelandic fiscal crisis concerning issues related to securities matters, restructuring of assets, cross-border conflicts of law, and litigation matters, as well as advice on the global settlement of claims. As part of this process, we were instrumental in rewriting Iceland’s insolvency law.