Restructuring

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While it’s not common for a lender to require an individual guaranty in order to extend commercial credit to an operating business[1], when such a requirement arises, the individual providing a guaranty should not take such a requirement lightly. If the guaranty is structured as a full recourse guaranty, it will create an obligation whereby the individual guarantor is responsible to repay the loan from his or her own personal assets. Individuals who convince themselves that a guaranty is just a lender formality and hope to rely on their relationship with their lender should a problem arise with the loan, may find their sense of comfort to be misplaced. A recent decision from the Southern District of New York serves as a reminder that well-drafted guarantees can and will be enforced.

In White Oak Glob. Advisors LLC v. Clarke, No. 24-CV-2128 (JSR), 2025 WL 2113436 (S.D.N.Y. July 29, 2025), Thomas and Ana Clarke (the “Clarkes”) each signed individual guarantees in favor of White Oak Global Advisors LLC (“White Oak”) in connection with loans that White Oak made to businesses indirectly owned by the Clarkes. The loans matured in 2023 and a total of over $200 million was outstanding at maturity. The parties agreed in the guaranty documents that the maximum liability of each guarantor under their respective guarantees was to be capped at $20 million per guarantor. The underlying dispute focused on whether the guarantees were applicable to a promissory note (the “Note”) that had been amended and restated numerous times and if so, whether the guarantees were unconscionable.Continue Reading Personal Guarantees: When a “Formality” Becomes a $20 Million Reality

The Information Sharing (Disclosure by the Registrar) Regulations 2024 (the “Regulations“) came into force in December 2024. The Regulations enhance insolvency practitioners (including the Official Receiver) (“IPs“) powers of investigation by providing them with greater access to information held by Companies House.Continue Reading New UK Regulations Enhance Insolvency Practitioners’ Access to Data held by Companies House

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

After a pause in 2022, there has been much talk of the continuation, or resumption, of a wave of retail bankruptcy cases as we begin 2023.  2022 was highlighted by Revlon’s filing (discussed here: Revlon May Signal Another Wave of Retail Bankruptcies | Retail & Consumer Products Law Observer (retailconsumerproductslaw.com)).  Revlon pointed to a number of issues that led to its filing, including most prominently, supply chain issues. Severe impediments in the supply chain – whether the inability to source product or the costs and delays in received goods — have been cited by many debtors since Revlon since as a leading cause of their distress.  And it may get much worse before it gets better, particularly for companies that source, directly or indirectly, from China.Continue Reading Continued Pain in the Retail Sector:  Coming Enforcement of Forced Labor Laws

Chapter 15 of the Bankruptcy Code provides a mechanism for United States cooperation and coordination with insolvency proceedings abroad, often affording foreign debtors wide-ranging relief and expansive rights through the United States Bankruptcy Court system.  Not all proceedings in foreign jurisdictions are eligible — in order to be so, a proceeding must constitute a “foreign proceeding” under the Bankruptcy Code. The Bankruptcy Code defines a “foreign proceeding” as “a collective judicial or administrative proceeding in a foreign country…  under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of the debtor are subject to control or supervision by a foreign court, for the purpose of reorganization or liquidation.”  It is generally understood that the definition should be interpreted liberally. Recently, the Bankruptcy Court for the Southern District of New York tested the limits of Chapter 15, providing important guidance regarding the eligibility of proceedings that do not involve “insolvency or the identification, classification, or satisfaction of debt.” See In re Global Cord Blood Corporation, Case No. 22-11347 (December 5, 2022).Continue Reading A Line in the Sand: Caymans Proceeding Ineligible for Chapter 15

Over a decade after Lehman’s insolvency, the English High Court handed down a key judgement in Grant v FR Acquisitions Corporation (Europe) Ltd [1] on 11 October 2022. The judgement provides commentary on when certain Events of Default have occurred and are “continuing”.

Although the court addressed these issues in the context of interest rate swaps entered into pursuant to an ISDA Master Agreement (the “Transactions”) and the impact of Lehman’s UK entity, LBIE, coming out of administration, the judgement may have implications beyond the derivatives market, for example in the context of financing agreements, corporate documentation, and distressed debt trading, as well as cross-border restructuring or insolvency situations.Continue Reading When Is an Event of Default “Continuing”?

The purchase and sale of assets by a debtor is governed by Section 363 of the Bankruptcy Code. So-called “363 sales” are typically attractive from a buyer’s perspective (and may be a primary reason for a bankruptcy filing). Perhaps the most important benefit afforded to buyers in 363 sales is the ability to acquire assets “free and clear” of claims and interests of third parties. Section 363(f)(5) of the Bankruptcy Code provides that a debtor can sell property free and clear of any interest in such property when a third party “could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.” But what constitutes an “interest” remains the subject of some debate, particularly as it relates to successor liability claims. One category of successor liability claims that may arise in traditionally unionized industries are the claims of pension funds that are triggered by a participant’s withdrawal. “Withdrawal liability” arises under the Multiemployer Pension Plan Amendments Act of 1980 (“MPPAA”) and may, at times, be asserted against a purchaser of the participant’s assets, typically where it had notice of the claim at the time of the acquisition and where there exists a “substantial continuity” in the business operations following the purchase. Continue Reading Successor Liability and Section 363: A Broad Interpretation of an “Interest in Property”

On September 14, Crowell partners Rick Hyman and Gregory G. Plotko, together with Dawn Haghighi, General Counsel of PVC Murcor, published an article on the Association of Corporate Counsel’s ACC Docket, “Your Counterparty Filed Chapter 11 – Make Sure to Check These 10 Boxes.” The article provides valuable insight for in-house counsel who find themselves…

In our February 14, 2022 post, we highlighted certain consequences regarding the treatment of a merchant cash advance (“MCA”) transaction as a “loan” rather than a “true sale” of receivables or future receivables and the implications of such treatment to an MCA provider.  Among the takeaways was that a court’s characterization of an MCA transaction as a loan opens an MCA provider up to a host of potential claims by cash advance recipients (“customers”) and their successors (e.g., bankruptcy trustees) that are not otherwise available if the transaction is treated as a true sale.Continue Reading Merchant Cash Advance Redux: Loan vs True Sale – New York Federal Courts Weigh In

In a matter of first impression relating to an important bankruptcy claims administration issue, Judge Sean H. Lane of the United States Bankruptcy Court for the Southern District of New York, recently denied the ability of a court appointed claims agent to sell and profit from providing direct access to publicly available claims register information. …