Creditor, Committee, and Debtor Representation

Creditor, Committee, and Debtor Representation

Overview

Schiff Hardin’s Restructuring Group has a wide-range of experience in all forms of restructuring transactions and insolvency proceedings. We regularly represents committees, secured creditors, unsecured creditors, debtors, lenders, bondholders, insurance companies, trustees, and receivers in all aspects of the restructuring process. Schiff Hardin’s Restructuring Group regularly represents clients in all aspects of insolvency law and formal bankruptcy proceedings.

Official and Ad Hoc Committees Representations

Chapter 11 committees are an important and often pivotal constituency in restructurings and bankruptcy cases.  We have extensive experience representing official and unofficial committees, managing the parties’ various agendas to leverage the power vested in the committee to secure the maximum recovery for its constituency.

As a full-service firm, with a deep bench in virtually all industries, our restructuring lawyers can similarly leverage Schiff Hardin’s vast talent base to tackle any issue confronting our committee clients, effectively serving as a resource to maximize creditor recoveries.

Creditor Representations

We have represented creditors in a variety of insolvency transactions. From transactions as simple as selling or purchasing a claim to transactions as contentious as leveraging a creditor’s rights in negotiating a plan, our attorneys have significant experience maximizing our client’s return through efficient legal representation.

The rights of each creditor we represent are analyzed from every aspect and discipline to assure a maximum recovery from every available resource. Our restructuring attorneys deliver efficient and effective advice to help clients navigate the complexities of any insolvency situation.

Debtor Representations

Our Restructuring Group has represented debtors in a wide range of industries, assisting them through each phase of the chapter 11 process. We are retained regularly for pre-bankruptcy workouts, out-of-court restructurings, balance sheet restructurings, strategic filings, debtor-in-possession financing, and asset sales and plans of reorganization. Our attorneys have a broad range of legal experience in all aspects of an organization’s restructuring, including corporate, securities, tax, employment, environmental and real estate. We often work in tandem with corporate, tax, and other groups within the firm to provide seamless representation while addressing the difficult and complex issues debtors must confront. We understand the need to manage a business, while attempting to resolve creditor or regulatory demands, allowing us to bring a practical and experienced perspective to any restructuring.

  • Experience

    Official and Ad Hoc Committees Representations

    • Represented one of the world’s largest solar panel manufacturers and chairperson of the Official Committee of Unsecured Creditors, holding a claim of more than $143 million.
    • Represented the Official Committee of Unsecured Creditors in the chapter 11 case of a newly developed $160 million New York hotel and condominium building, resulting in a 100% recovery for unsecured creditors.
    • Represented the Official Committee of Unsecured Creditors in the bankruptcy of the largest distributor of health supplements in the country, in the United States Bankruptcy Court for the Eastern District of New York.
    • Represented the Official Committee of Unsecured Creditors in the chapter 11 case of a “penny stock” brokerage bankruptcy firm with more than $100 million in stock fraud and manipulation claims in the Southern District of New York.
    • Represented the Official Committee of Unsecured Creditors in the restaurant chain’s $200 million chapter 11 proceeding in the Southern District of New York.
    • Represented the Official Committee of Unsecured Creditors in a mass tort/product liability case in the Northern District of Illinois that culminated in a confirmed plan patterned after the Piper Aircraft present and future claims trusts, garnering national press.
    • Represented the Official Committee of Unsecured Creditors in a case where unsecured creditors received a 100 percent dividend in a successfully reorganized chapter 11 case after the restructuring of more than $30 million in HUD secured debt.
    • Represented the Ad Hoc Committee of All Present and Former Employees, an organized group of approximately 250 founding employee shareholders in the District of New Jersey.
    • Represented the Ad Hoc Committee of Certain Equity Security Holders, in the District of Nevada, representing the interests of more than 100 investors in a contested plan confirmation hearing, competing plan litigation, and related adversary proceedings.
    • Represented the Official Committee of Unsecured Creditors in the debtors’ chapter 11 cases, involving successful plans of reorganization with material dividends, including recovery of fraudulent transfers and preferences.
    • Represented official unsecured creditors committee in the successful appointment of a chapter 11 trustee and helped develop the facts and theory related to fraudulent conveyance and alter ego litigation later brought by the chapter 7 trustee seeking over $100 million from insiders of the debtor.

    Creditor Representations

    • Represented a Real Estate Investment Trust (REIT) in connection with its $106 million loan secured by a New York apartment building, obtaining a full recovery, including title to the building and a multi-million dollar cash payment.
    • Represented the Note-A Senior Lenders in the workout of a $124 million loan facility secured by one of the largest luxury condominium developments in Orlando, Fla.
    • Represented a major insurance firm in the recovery of its mezzanine debt in a complex chapter 11 case in Los Angeles that required resolution of a class action and negotiating a sale of the business at a substantially higher price than was initially offered.
    • Represented the Indenture Trustee for the 93/94 Noteholders, under two $200 million indentures in the $6.5 billion bankruptcy (which was then the third-largest bankruptcy proceeding in United States history), in the Northern District of Illinois, resulting in a 100 percent distribution to all noteholders.
    • Represented the senior secured lender in the liquidation of the supplier of software and operated call centers for automated fundraising for political and non-profit clients. Although the debtor failed as a result of the cost of intensive litigation with the prior owner, our client avoided significant litigation threatened by the same plaintiff by clever use of a cash collateral order and strategic litigation to achieve a global settlement that allows our client to share in the proceeds of any litigation recoveries.
    • Represented the senior secured lender in overall strategy for liquidation of a U.S. manufacturer and distributor of auto aftermarket winches and UK distributor of winches for aquaculture and auto markets. We utilized judicial proceedings in Delaware Chancery and UK insolvency court.
    • Represented the senior secured lender in the workout and later bankruptcy of a foundry whose principal clients were manufacturers supplying heavy equipment to the oil and gas, mining, and transportation industries. As part of an ongoing workout for the past three years, we negotiated an asset purchase agreement and financing commitment with an investor group that purchased the debtor’s assets in a § 363 sale and repaid the client’s loans. We successfully defended and settled litigation brought by the unsecured creditors’ committee challenging the application of proceeds.
    • We represented the senior secured lender in the restructuring and sale to a private equity fund of $45 million in senior and subordinated loans to a manufacturer and marketer of mine communication and safety equipment in the U.S. and Australia. This required working through difficult issues of corporate governance caused by divisions among the owners and managers of the borrower, and animosity toward the buyer, which was related to one faction of the ownership. The loan sale was crucial, because the fractious management/ownership issues and the poor market for the company’s assets seriously impaired the client’s ability to liquidate the assets and generate any significant recovery.
    • Represented an equipment lender with a senior security interest in several heavy-duty, off-road cranes as well as a blanket security interest in the debtor’s assets in the negotiation of complicated DIP financing arrangements by the legacy asset base lender. We negotiated a right to “opt out” of a bulk sale of equipment that allowed a successful sale of collateral to a strategic buyer at a higher price and negotiated a discounted settlement of the debtor’s motion to surcharge the collateral for costs of administration that allowed a timely end to the litigation and a better than expected recovery. We represented the mortgagee in multiple developer bankruptcies arising from loans purchased from other financial institutions and brought speedy relief to languishing foreclosures by overcoming vexatious defenses and tactical maneuvering as well as incomplete or inaccurate documentation by the predecessor institutions, including terminating each bankruptcy case within 60 days through aggressive litigation that enabled prompt sales at favorable recoveries.
    • Represented a bank agent in a complex cross-border bankruptcy case of a defense contractor involving the debtor’s supply chain and the simultaneous sale of U.S. and Canadian corporate assets.
    • Represented a consumer finance company in obtaining arbitration and civil RICO judgments against a developer who used fraudulent appraisals and “straw purchasers” to obtain millions of dollars of financing for derelict Chicago houses.
    • Represented a credit union in the successful referral for criminal prosecution by the United States of a RV dealer who used fraudulently obtained titles and “straw purchasers” to obtain millions of dollars of financing for nonexistent luxury RVs.
    • Represented a junior mortgage lender in the foreclosure of more than 10 downtown Chicago office and commercial residential high-rises.
    • Represented a bank, its subsidiaries, and their officers and directors, in the successful defense of a $300 million lender liability counterclaim to a foreclosure action in which we obtained pre-trial dismissals — with prejudice — of all claims against the officers, directors, and subsidiaries and of the claims of breach of fiduciary duty, breach of good faith, and one breach of contract claim. Further, after trial, obtained judgment for the bank for all amounts sought, including all of the bank’s legal fees, and dismissal of all remaining lender liability claims. 
    • Represented a securities firm in the successful defense of fraudulent transfer claims against them as sellers of stock in the debtor’s LBOs by utilizing provisions of the Bankruptcy Code that, years before, we helped to draft to protect such payments as “settlement payments.
    • Represented a national consumer products company in a bankruptcy in Columbus, Ohio, and related litigation in federal courts in Ohio, New York, and Oklahoma, to defeat securities fraud, fraudulent transfer, alter ego, and RICO claims, as well as a wide variety of bankruptcy litigation.
    • Represented an LBO buyer in the successful defense against fraudulent conveyance, alter ego, RICO, and “unlawful dividend” and related litigation brought by the trustee.
    • Represented the LBO lender in proceedings to recover on its claim by the sale of several operating plants and the settlement of all fraudulent transfer and lender liability claims in the bankruptcy proceedings in Chicago.
    • Counsel to a bank in the successful defense of a claim for several million dollars arising from the bank’s termination of a line of credit, foreclosure on $3 million in GNMA securities without notice, and the consequent liquidation of borrower by the Illinois insurance commissioner, in which we made new law favorable to lenders that the over the counter market for GNMA securities is a recognized market for which no prior notice is required and that the implied duty of good faith does not create an independent right of action under the Illinois UCC.
    • Represented the First Series Indenture trustee for approximately $100 million in secured equipment certificates in the bankruptcy case.
    • Represented the single largest bondholder in the District of New Jersey chapter 11 cases related to the Trump Taj Mahal bankruptcy.
    • Represented prominent commercial landlords and exclusive broker in matters involving multiple unexpired leases/licenses and other pre-petition and post-petition claims.
    • Represented counterparties to repurchase agreement and other financing arrangements.
    • Represented national banks in connection with the Debtor’s substantial servicing obligations in excess of $1 billion and other claims and interests.
    • Represented a leading global investment-banking firm in connection with various license telecommunication agreements, non-residential real property leases, hotel accommodation services agreements, and preference defense.
    • Represented the indenture trustee in bankruptcy reorganization of asbestos flooring manufacturer in New Jersey ($100 million).
    • Represented the secured lender in chapter 11 case, involving contested cash collateral and DIP financing issues.
    • Representation of numerous financial institutions in the defense of claw back litigation under state and federal preference and fraudulent transfer litigation.

    Debtor Representations

    • Represented chapter 11 debtors in their successful chapter 11 cases.
    • Represented chapter 11 debtors, resulting in a successful reorganization as well as a published decision regarding claims allowance.
    • Represented the chapter 11 debtor in its complex, multinational chapter 11 bankruptcy proceeding seeking to restructure nearly $100 million in asserted claims.
    • Represented the debtor, as special litigation counsel, seeking to recover $1 billion in fraudulent transfers from insiders under alter ego and fraudulent transfer liability (recovery of over $650 million in settlement).