Insolvency and Creditors' Rights

The Insolvency and Creditors’ Rights Practice Group has extensive experience in:

• Representing parties in Chapter 11 cases and in other bankruptcy and workout-related matters
• Advising clients on secured transactions and default and bankruptcy risks in commercial transactions
• Defending and prosecuting litigation arising out of bankruptcy cases, loan defaults and all types of secured transactions, in both bankruptcy and non-bankruptcy courts
• Attaching and foreclosing upon collateral, as well as conducting public and private sales of pledged assets
• Representing foreign liquidators when the assets of a foreign bankruptcy are located in the United States and advising foreign creditors in U.S. reorganization and liquidation proceedings

We have frequently represented secured and unsecured creditors, debtors and asset acquirors in bankruptcy cases and non-bankruptcy workouts, and have advised banks, mortgagees, lessors of real and personal property and other creditors in enforcing their rights. We have also represented indenture trustees and creditors’ committees, together with institutional and individual creditors’ committee members.

Our practice group may often draw upon the resources of other groups in the firm, including the Real Estate, Corporate, Tax, Environmental, Maritime and Litigation Practice Groups.

We represented parties who had open transactions with Lehman Brothers Holdings, Inc. and its affiliates in closing out and asserting the claims arising out of those transactions.

 

We are advising parties who invested directly or indirectly in Bernard Madoff’s Ponzi scheme on their rights and liabilities in connection with those investments.

 

We are representing indenture trustees in the pending chapter 11 cases for Ambac Financial Corporation and FairPoint Communications, Inc., in theSouthern District of New York, Majestic Star Casinos, Diamond Glass, Inc. and Wolverine Tube, Inc. in the District of Delaware, and Vesta Insurance Group, Inc. in the District of Alabama.

 

We are representing the Liquidating Trustee of Bethlehem Steel Corporation in the Southern District of New York, the Distribution Trustee of VP Buildings, Inc, the successor-in-interest to LTV Steel Corporation, in the Northern District of Ohio, and the Joint Receiver of Reassurance Afviklings Aktieselskabet, a Denmark domiciled insurer, in a previously instituted ancillary proceeding in the Southern District of New York.

 

We recently succeeded, on behalf of a Distribution Trustee, in obtaining the denial by the U.S. Supreme Court of a Petition for a Writ of Certiorari by one of the largest property/casualty insurance companies in the world in a bankruptcy related case wherein the insurer sought administrative priority for reimbursable expense payments anticipated to be made by the insurer post confirmation for losses incurred but not yet reported of a debtor company.

 

We are representing a Liquidating Trustee in four separate adversary proceedings, three of which were brought by the Trustee and the fourth which the Trustee is defending, in connection with unrelated income and real estate tax refunds, excess insurance premiums, and third party liquidation proceeds marshaled by the Liquidating Trustee.

 

We are representing an indenture trustee in an adversary proceeding brought in the Southern District of New York by a prominent telecommunications company seeking the subordination of the interests of secured creditors and a declaration by the bankruptcy court regarding the priority, scope, validity and enforceability of any security interests granted by a debtor in licenses, permits and regulatory approvals granted by the FCC, together with any proceeds derived from such licenses.

 

We are representing the interests of a Liquidating Trustee in a mediation concerning the ownership and ultimate disposition of funds derived from assets retained by a debtor that sold substantially all of its assets, as well as funds derived from such assets which may have been converted for the benefit of the acquiring corporation.

 

CL&M represented several dozen clients with claims against Enron or whowere sued by Enron to recover payments made prior to its bankruptcy. We participated in litigation and negotiations over the terms of Enron’s plan of reorganization, finally confirmed in July 2004, and continue to represent clients in post-confirmation litigation.

 

In 2003, we won a landmark victory for the Official Committee of Unsecured Creditors of Cybergenics Corporation in the Court of Appeals for the Third Circuit. After an extremely rare hearing en banc, the Court of Appeals reversed its prior panel decision by holding that a bankruptcy court may authorize an unsecured creditors’ committee to prosecute avoidance claims wherethe debtor in possession fails to do so.

 

We represented the London solicitors firm Lewis Silkin in connection withits advice to the liquidators of a U.K. company with an interest in a U.S. Aircraft company. The representation was in connection with the sale ofassets of the U.S. company and its subsequent voluntary liquidation

Representative Clients

Our clients have included the Bank of New York Mellon, U.S. Bank, the FAO Schwarz Family Foundation, the Board of Directors of Loral Orion, Inc., and Whole Foods Market, Inc.

Professional Activities

James Gadsden is a member of the Committee on Bankruptcy and Corporate Reorganizations and the Committee on Structured Finance of the Association of the Bar of the City of New York, a former Chair of the Committee on Trust Indentures and Indenture Trustees of the American BarAssociation’s Section on Business Law. He has been a speaker at programs sponsored by the Business Bankruptcy Committee and Working Group on Legal Opinions of the Section of Business Law, the New York University School of Continuing Legal Education, the American Bankers Association and the Banking Law Institute and has published numerous articles in the bankruptcy field.

Franklin (“Frank”) Ciaccio is a member of the Business Bankruptcy and Corporate Governance Committees, of the Business Law Section, of the American Bar Association, and a former Chairman of the Committee on Developments in Business Financing. He is a member of the Association of the Bar of the City of New York and a former member of its Insurance Law Committee. He was formerly a member of the American College of Investment Counsel (and one of six lawyers who participated in drafting the Model Simplified Indenture that was first published in The Business Lawyer).

Aaron R. Calm is a member of the American Bar Association’s Section on Business Law, the American Bankruptcy Institute, and the Turnaround Management Association. He has been a speaker at programs sponsored by the Section on Business Law and the Association of Insolvency and Restructuring Advisors, and has published various articles dealing with bankruptcy issues.