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Randall Hagen

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Randall L. Hagen is a counsel in the Corporate Group in Crowell & Moring's Washington, D.C. office. Randy has 25 years of experience managing bankruptcy and creditors' rights litigation and transactional matters, as well as counseling clients on credit and risk mitigation strategies. He has served as lead attorney in complex litigation before federal and state courts (jury and bench trials, as well as appeals) involving bankruptcy and creditors' rights, commercial banking and financial disputes, enforcement of restrictive covenants in employment contracts, and protection of trade secrets, as well as negotiating and documenting resolutions for complex commercial disputes, including loan restructuring, workout, or forbearance arrangements.

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As more commercial tenants seek bankruptcy protection, the question of assuming or assigning their leases and what defaults need to be cured gets debated. Not all Circuits have decided these issues. The topic of non-monetary defaults seems to get the most attention.

In bankruptcy, assumption or rejection allows a debtor (tenant) to decide whether to keep or terminate unexpired, nonresidential real property leases to maximize business profitability. Assumption means the debtor continues the lease, curing all defaults. Rejection terminates the lease, allowing the debtor to walk away, with damages capped by statute.

Does a debtor/trustee have to cure a default relating to a “going dark” provision or cure other non-monetary defaults in a nonresidential real property lease to assume or assign (or to take other action with respect to) that lease under section 365 of the Bankruptcy Code?Continue Reading You Don’t Have to Turn Back Time to Turn on the Lights

2024 brought a number of headline stories that will impact the bankruptcy and restructuring market in 2025 and beyond. A few of those are summarized below.

LMEs (Of course).  Liability management exercises — sometimes referred to as “lender-on-lender violence” — continued on their growth trajectory during 2024, with restructuring advisors looking for (and finding) gaps in credit documents that allow for the practice.  While uptiers, drop-downs and double-dips were all the talk of the first 364 days of the year, the Fifth Circuit’s ruling in Serta coming on December 31st closed out the year with a bang (or a thud).  The Circuit Court reversed former Bankruptcy Judge David Jones’ ruling which had blessed Serta’s uptier transaction (allowing the majority lenders to leapfrog the non-participating lenders). Judge Jones’ original decision, coming from a prominent jurisdiction (Southern District of Texas) was a “stamp of approval” for many uptier transactions that came before and that followed.  Among other things, the District Court found that the exchange of existing debt for newly issued senior debt did not constitute an “open market purchase” because it was not made available to all lenders. The District Court further remanded to the Bankruptcy Court the question of whether the excluded lenders had valid counter-claims (breach of contract, etc.) against the participating lenders and the borrower. The court further stripped certain indemnification provisions that had been included in the plan to protect against such a ruling.  This brand new decision will likely have a dramatic impact on the feasibility of future LME transactions (at least until the drafting catches up). Others transactions that do not rely on open market purchases (J.Crew, for example) will be less impacted by the ruling. Continue Reading Bankruptcy and Restructuring in the US:  A Snapshot of 2024