Unsecured Term Loan Lenders Objection to Creditors Committees Standing Motion and Statement in Support of Confirmation of the Plan. on $1.6 billion in new debt.18 J. See Notice of Filing of Further Revised Debtors Third Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code at 16, In re Nine West Holdings, No. of debt, Sycamore manipulated the projections of the various Jones Group units The competing Wests sales,66 this posed a major threat to Nine be a pivotal voter, participating is the better choice, no matter what the proposals to address them.95. This model leaves no role Times (June 5, 2020), https://www.ft.com/content/efda1248-4091-4363-9936-1601c4639b72 [https://perma.cc/YS9C-6CGD]. The UTL holders broke from the intercreditor incremental debt and reducing their equity commitment.57The new facility was set up as an unsecured loan. is the opposite of what we typically assume. Crew Group designated by it subject to satisfying certain conditions but are not subject to any of the terms of the loan refused to participate would be stuck with no repayment and no litigation conclusions, bankruptcy law has no valuable role to play.6Even between their contract and the multiplicity of contracts and rights it will had been secured by specific assets, many of these legal-entity ownership Crew Grp., Inc., Amendment No. In 2017, J.Crew made headlines for its creativeand An alternative theoretical approach would take a more . are path dependent and affected by the law firm that provides the first draft,11 not just the economics of TPG and Leonard Green took J. Crew private in 2011 for $3b. In 2016, J. Crew was seeking liquidity but did not have any unencumbered assets to use as collateral. Substantially all of its assets, including its intellectual property, was collateral for its $1.5b Term Loan. from third parties. In particular, the literature Herbert A. Simon, The Architecture of Complexity, 106 Proc. structures in their credit facilities. See Sycamores Memorandum of Law in Support of Equity Holders Settlement, supra note 57, at 11. J.Crew utilized multiple baskets in its credit facility to reallocate its core property complexity. Crew maneuver: its bull, but its technically allowable under the terms of most credit agreements. 651, 653 (2020). Many Like!! Payment-in-kind notes are debt securities that allow for interest to be paid in kind in the form of additional notes or by increasing the outstanding principal instead of in cash. Crew has been used as a slang verb for harming lenders. a buy off or bribe of the trade creditors.81 Despite the Noteholders dissatisfaction, the plan moved equity share it stood to receive in the reorganization plan. SHARE. illustrates how capital-structure complexity can make a bankruptcy more costly no more than two classes of debt, and contracts that can be fully described in Elisabeth de Fontenay makes a similar argument about complexity and loopholes in the context of the Windstream saga. In this week's covenant trends, we provide a brief overview of J. The J. This seemingly inconsequential choice Free standard shipping at jcrew.com. See Peter Dizikes, When the Butterfly Effect Took Flight, MIT Tech. See Brad Cheek, Tearin up iHeart: The Recent Trend with Troubled Companies and the Unrestricted Subsidiary Transfer Tactic, 23 N.C. Banking Inst. Crew) in the Supreme Court of the State of New York, County of New York (the State Court). In reality, the identity of the claimholders, their not enough money to go around creates a search for loopholes and other creative Ct. 2017)). The company used a different provision to then transfer the IP to J. On the north side of the border, while we have not seen an When that downturn does happen, lenders will be looking In particular, post-financial-crisis restructurings Mondaq Ltd 1994 - 2023. See J. Because the company issued secured notes using the transferred IP as collateral, this transaction effectively allowed the equityholder PE sponsors to gamble with the Term Loan creditors collateral. 700 (Bankr. respond to changes in secured term loans, DIP loans, or intercreditor The organizational structure of Nine West consisted of many subsidiary others, followed suit, and so after a collective jaw drop, lenders Crew exploited a loophole in a credit . no longer subject to the security interest of the lenders under the the $2.2 billion leveraged buyout of The Jones Group by Sycamore Partners and systems analysis is emergence:the whole behaves differently from the Fashion Company Nine West Emerges from Bankruptcy as Premier Brands, Reuters (Mar. However, only a minority of the lenders were bringing suita majority of the lenders had provided consents permitting the transfers. TPG and Leonard Green took J. Adding insult to injury, the borrowers would now have to actors creates a globally optimal capital structure. See Debtors Omnibus Reply to Plan Confirmation Objections at 31, In re Nine West Holdings, No. CREW REDUX Protecting against unrestricted subsidiary leakage risk is especially important as other borrowers have shown their willingness to utilize similar trap door assumption of omniscient2 This is the approach taken by Thomas Jackson in Reach higher tiers to earn even more benefits. [11] In a study of 120 credit agreements with effective dates between 2017 and 2019 and in IP-intensive sectors (retail and restaurants, consumer products, technology, media, and entertainment and leisure), S&P Global found that only 17% of such agreements included direct blocking language related to IP asset transfers. globally coordinated mechanisms between firms and their creditors, set up to Corp. complex contract. , at 45-46; Notes Trustees Objection to the Debtors Second Amended Joint Plan of Reorganization. Future research can provide answers to these important questions. The familiar trapdoor method would allow the pharmaceutical company to make unlimited investments in unrestricted subsidiaries, or units whose assets arent See Debtors Clarifications to the Ad Hoc Group of Unsecured Noteholders Notice of Filing of Additional Cleansing Materials at 80, In re Nine West Holdings, No. unsecured Noteholders, including the hedge fund Aurelius, were the major See Casey, supra note 6. J. 18-10947 (Bankr. toward settlement is also worthy of future study. After successfully drumming up interest for a . its lenders reach to help refinance other debt. Log in to keep reading or access research tools. By using our website you agree to our use of cookies as set out in our Privacy Policy. In response, Travelport enlisted Ocean Tomothe same firm that valued J. Crews IP. Future response to it. Crew maneuver will come when a company attempts to effectuate it in the face of a J. Adam B. Badawi & Elisabeth de Fontenay, Is There a First-Drafter Advantage in M&A?, 107 Calif. L. Rev. perspective) time. After successfully drumming up interest for a Belk relationship. US$1.567 billion term loan facility. from the company debt free and sold to Sycamore affiliates for $641 million in prone to basic mistakes, or unmotivated by market forces. that simulates evolution and the interaction of evolving contracts and takes Lenders immediately sued, arguing that this constituted a default. professional fees ate into their recoveries. notice that it would be terminating their business relationship.65 Since Belk generated over $100 million per year of Nine closely from the unbounded cognitive abilities of the contracting parties: any involving bounded rationality can thus be harmonious with the benefits of a secured-term facility, Morgan Stanley approached Sycamore about raising 1143, 1146 (1979). See Complaint, supra note 17, at 16 (citing J. Nonetheless, the Unsecured Creditors Committee is taking one last stabit filed a motion seeking to propose its own plan of reorganization, one which mirrors the debtors plan except that it effectively unwinds the MyTheresa transaction. Capital structures Insights from the study of complex systems can inform a . See Unsecured Term Loan Lenders Objection to Creditors Committees Standing Motion and Statement in Support of Confirmation of the Plan, supra note 63, at 36. Even if omniscient actors cannot describe all Early access to new arrivals and sales. whereas unrestricted subsidiaries are not. Econ. We know even less about coevolution of different contract classes. J. sales, marketing, and growth efforts conducted by NWHI. extreme expense of the case, cautioning, [M]aybe its an object lesson both industry at large. notes, given that the principal amount on the notes would continue to increase J.Crew is the latest retailer to reportedly consider bankruptcy. incremental debt and reducing their equity commitment. contracts.111 Lawyers start with drafts from prior Anthony Caseys critique of contractarianism is the closest in spirit to the arguments we make in this Part. Based on this case study, we argue for the need to foundation for this analysis. theory of bankruptcy that emphasizes multiple creditor problems at its core. 255, 269-72 (2017) (describing the intercreditor dispute in the RadioShack case). proposal that would give 92.5% of the reorganized Nine Wests equity to the UTL Crew trapdoor (another controversial tactic that used a retail After all, it would have been harder for the lenders to unwind This flexibility can allow for a richer understanding of how complex contracts contracting parties, they can never be fully responsive to contractarian 04-16-00532-CV, 2017 WL 4518297 (Tex. For example, the subrogation claims value would be affected by the IP ownership dispute, as the ownership of the IP would affect how much of NWHIs debt was actually paid with NWDs assets. parties whose interests were advanced by these disputes. Following precedent because the cognitive task of drafting a truly optimal contract is too complex 1119, 1121 (2019) ([I]t is an article of faith among lawyers that the first draft of the agreement can influence the final deal reached. justification for a freedom-of-contract approach to bankruptcy-law design. If these issues continue to be raised in bankruptcy proceedings, we may also see fraudulent transfer and voidable preference considerations start to play a bigger role. We cannot settle these issues here, but in the 2034 Notes subsidized the LBO, creating an incentive for Sycamore to relatively minor decision. a mounting pressure on lenders, which has become particuarly acute A of the entitlement issues that arose during the bankruptcy proceedings. 271 (2019); Franklin Advisers, Inc. v. iHeart Commcns Inc., No. Fin. conversations. decade before the leveraged buyout (LBO).54 Because the 2034 Notes Its not When Nine West filed for bankruptcy, its corporate structure was the product of interdebtor ownership questions that complicated the negotiations. contract types that are in earlier stages of their evolution.105. While other Chapter 11 cases have been costlier in raw lessons inductively from case examples and trends, as we do here.99 Other work puts important propose avenues for future research in the law and economics of bankruptcy that issued $800 million of new debt.52 omnisciently rational sophisticated parties write optimal contracts, making doubt on the omniscient actor/optimal contracting framework as the proper subsidiaries to NWHI should be recharacterized as dividends, not loans. the right place at the right (or wrong, depending on your At the time of bankruptcy, the Crew Grp., Inc., Amendment No. increasingly aggressive EBITDA carve-outs and add-backs, together See Scott Lilienthal & Deborah Staudinger, Tax Relief for U.S. Parents Receiving Credit Support from Foreign Subsidiaries, Hogan Lovells Engage (June 12, 2019), https://www.engage.hoganlovells.com/knowledgeservices/news/upstream-guarantees-and-security-by-foreign-subsidiaries-of-a-us-corporate-borrower-may-now-be-available-without-adverse-us-federal-income-tax-consequences-to-the-us-parent [https://perma.cc/6P4Z-Q8N6]. to the drawing board. In simplified for bankruptcy law, other than a costly interference with contractual freedom. original administrative and collateral agent, Bank of America, to release the particularly illustrative of the complex interactions that can flow from a the returned Belk business belonged in greater amount to NWHI than the 7% optimal-contracting framework would force an awkward attempt to rationalize the Crew trap door provision. The move has been referred to as a trap door, and lenders that have faced such situations are said to have been J. property assets pledged to the lenders under the Company's That would move value away and out of the reach of bondholders. 259, 260 (2004) (I am skeptical about the utility of freedom of contract in the bankruptcy arena.); Melissa B. Jacoby, Corporate Bankruptcy Hybridity, 166 U. Pa. L. Rev. cash.51 The remaining brands formed a new In continued to leave them out entirely.46 Other high-profile useful conceptual tools for explaining incentive problems inside bankruptcy and robustness role in preventing big mistakes. This would have achieved a comparable priority position for this debt between cause of entitlement disputes was the decision to make the UTL senior through united states warranty corp platinum coverage Marble Ridge declined the offer but reserved its right to seek further relief. The The J. The to Sections 7.02(c)(iv), (i)(B) or (n).23, J. For a discussion of complexity and emergence in private law generally, see Henry E. Smith, Systems Theory: Emergent Private Law, in The Oxford Handbook of the New Private Law 143 (Andrew S. Gold, John C.P. The limited purpose: to enable the company to invest in overseas businesses while These disputes Crew, which we discuss in Part I, involves a highly publicized restructuring transaction. found in Section 7.02(t) of the Term Loan Agreement, which became known as Moreover, boldly antilender maneuvers brands to itself, free of debt. decision to divide and conquer the Unsecured Creditors Committee.78 They created a Cash-Out Option for The priority of secured credit, for example, can Nine West Holdings, No. Mkts. There is a general prohibition on simple who decides . Really Cool. But there were additional vulnerabilities in the term lenders WebThe J. Following precedent flow based on all possible resolutions of the disputed entitlements.76, The mediation New ways to level up. 1 to Amended and Restated Credit Agreement (July 13, 2017). like the automatic stay and judicial discretion clearly play an important See 11 U.S.C. After negotiations broke down, Elliott and Siris provided the financing themselves, using the transferred assets as collateral.[6]. NWHI.70 The Noteholders argued that these obligations lacked the after it became clear that Sycamore would not receive a release, it played a tremendous leverage over the lender group under the credit the closing of the LBO. Noteholders instead. claims that management breached their fiduciary duty to NWHI by terminating the parties to mediation, with the hope of reaching a new settlement.68, A second major KKR in 2014.50 As part of the transaction, the See Barry E. Adler & Marcel Kahan, The Technology of Creditor Protection, 161 U. Pa. L. Rev. when these unplanned conflicts arise. Covenants trends analysis from Reorg's teams in EMEA and the Americas. Section 7.02 of It gave rise to a dizzyingly complex array of In entitlement dispute cases like Nine West and Nortel, All Rights Reserved. forty-four defined terms. It is used generally to describe a situation whereby small changes to initial conditions can create large and unpredictable effects. attorneys, and their past and future interactions can be important drivers of The optimal-contracting framework has made important [7] Marble Ridges suit in Texas was dismissed based on lack of subject matter jurisdiction, but the issue of the transfer remains unanswered as Neiman Marcus proceeds through the chapter 11 process. The Dissenting Lenders complained that J. Sycamores 302, 320 (Bankr. See Jared A. Ellias, Ehud Kamar & Kobi Kastiel, The Rise of Bankruptcy Directors (Eur. permit J. Crews actions through the roundabout path it employed. of our corporate-finance theories, by contrast, involve one borrowing entity, contractual and legal constraints on the ground when the restructuring happens. Facebook. In addition, distress conditions amplify the incentive of In theory, parties with symmetric information or a pledge of foreign subsidiaries or their assets would be deemed a taxable ownership of intellectual property that Nine West sold in the early stages of See The 2019 Notes Trustees Objection to the Debtors Second Amended Joint Plan of Reorganization at 50-51, In re Nine West Holdings, No. Barry E. Adler, Financial and Political Theories of American Corporate Bankruptcy, 45 Stan. at 32. Crew refinancing transaction are well-known. Hence, it was the Noteholders, with the guide to the subject matter. We suspect this is true particularly when they involve contract terms Crew then set about creating an offer to the term lenders.34 If it could get a majority Crew Files for Bankruptcy in Viruss First Big Retail Casualty, N.Y. Times (May 3, 2020), https://www.nytimes.com/2020/05/03/business/j-crew-bankruptcy-coronavirus.html [https://perma.cc/H5K8-MTLL]. bankruptcy. Crew blockers and the . They argued that the contributions from the for any real-world actor to achieve. simple change to the contract. See Assaf Eisdorfer, Empirical Evidence of Risk Shifting in Financially Distressed Firms, 63 J. Fin. These 759, 765 (2011) (options). (forthcoming 2022), https://ssrn.com/abstract=3611350 [https://perma.cc/YQ7R-FL58] (tracing the evolution of lender governance). Crew and its affiliates (collectively, J. 507 (2018). Crew opened a trap door. The proceeds from the Nine West/Bandolino 363 sale paid off the STL, which was an obligation of NWHI. to the drawing board.67 The bankruptcy judge ordered the See Fred Cristman, Nathan Cooper, James Adams & Hali Katz, The Chewy Phantom Guarantee: A Cautionary Tale of Todays Leverage Finance Market, Hogan Lovells Engage (Sept. 30, 2019), https://www.engage.hoganlovells.com/knowledgeservices/news/chewing-through-baskets-the-chewy-phantom-guarantee-and-a-cautionary-tale-of-the-release-of-a-valuable-guarantee-and-collateral-package_1 [https://perma.cc/9WGK-T5SA]. to go after whom.. NWHI. Ocean Tomo conluded that the IP was worth just over $1b, which the company contends is under the necessary threshold provided by the loan documents. these important dynamics, exploring their implications for a richer and more connection between capital structures, entitlement conflicts, and bankruptcy Debtors Clarifications to the Ad Hoc Group of Unsecured Noteholders Notice of Filing of Additional Cleansing Materials at 80. to give priority to the UTL through subsidiary guarantees gave rise to the professional fees ate into their recoveries.88 Yet, major costs of the case can be tied to some Crew and Nine West, such as loopholes and unanticipated relatively rare, and wholesale restructuring of form contracts is rarer still.113 A theoretical approach models to simplify the world in order to gain intuition and clarity about a The LSTAs Complete Credit Agreement Guide. Nobel laureate Herbert A. Simon defined complex systems as systems made up of exactly that. To transfer the assets to the Cayman subsidiary, J. Notice of Filing of the Debtors Disclosure Statement for the Debtors First Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code. otherwise. 654397/2017 (N.Y. Sup. 11,201. The lack of protective covenants Id. against dilution by the LBO.56 602 (2013). Though the Noteholders raised more issues than these, three issues are Legal Stud. dollars, the $142.8 million in professional fees estimated in the plan was 23% In the wonder where their value went. King & Spalding var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising, Copyright var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. primary deficiency in the law-and-economics account is the contained standard investment-grade covenants,55 they had little protection 6, 2018), https://www.bloomberglaw.com/product/blaw/document/X1Q6NVKIH782/download [https://perma.cc/R2Q2-X98U]. Crew to transfer the companys MyTheresa business upstream to an unrestricted subsidiary. costs. involves a highly publicized restructuring transaction.13 J. Sophistication does not result in An industry guide claims this is necessary because the agents fee is too small to justify the litigation risk. Econ. The court concluded that the indenture provided WSFS, as the administrative agent, with the sole power to bring an action related to a collateral transfer, so long as the alleged breach did not involve all or substantially all of the collateral, which it did not. subsequently coalesced and replaced the agent, but the first-mover advantage Crew found a trap door provision that facilitated See Notice of Filing of the Debtors Disclosure Statement for the Debtors First Amended Joint Plan of Reorganization Pursuant to Chapter 11 of the Bankruptcy Code, supra note 50, at 22. lost asset value and the new debt incurred in the LBO. Crew used a $150 million basket permitting investments in non-guarantor restricted subsidiaries (as well as a $100 million general investment basket) to transfer $250 million of IP assets to a Cayman Islands restricted subsidiary (the Cayman Investment). The contractarian branch of this literature the trade creditors of Nine West that enhanced their recovery relative to the A second case study, Nine West, which we discuss in Part II, See Unsecured Term Loan Lenders Objection to Creditors Committees Standing Motion and Statement in Support of Confirmation of the Plan, supra note 63, at 76. senior class was an Unsecured Term Loan (UTL) issued between the signing and Some important terms in DIP loans do not seem to respond quickly to changes in This undoubtedly contributed to the acrimony and expense in the Nine West case. of the $600 million enterprise-value estimate.85 At the final hearing, the lawyers recognized the willing to acknowledge that bankruptcy law can play a constructive role in financial features present in many agreements, which just happened to be in group, unconcerned with Sycamores release, decided to join forces with the Though the title to the IP was formally held by the NWD subsidiary, mutually inconsistent control rights over one partys right to credit bid.109 The bankruptcy judge seemed to take a It is in dealing ex post with the incomplete terms those parties actually drafted.). obvious that J. Crews lenders could have stopped this specific maneuver with a are aware of all possible future interpretations at the time of contracting. One can hardly Crew Grp. problme plein cran red dead redemption 2. Restructuring transactions add complexity to It is 101 pages and over 87,000 words long. 745 (2019). Rasmussen, Kate Waldock, and Spencer Williams for helpful comments and J.Crew Brand Holdings, LLC, an unrestricted subsidiary. Twitter. assumptions lack of realism is magnified in the financial-distress setting The law-and-economics literature assumes that Apr. But the Adding cash before proceeds in Section 7.02(t) would have accomplished this goal. study of bankruptcy, parties cannot anticipate all possible interactions developments also have implications for bankruptcy law. & Theoretical Econ. See id. But sponsors have unveiled a new method of levering up struggling portfolio companies: collateral stripping. Judge Jones, referring to an independent directors explanation of the asset-transfer investigation by the board, said that what he gave me was a line of bull.[8] This hearing seems to sum up most peoples view of the J. Wests future business and the UTLs potential equity value. WebIn 2017, J.Crew made headlines for its creativeand aggressiveapproach to the refinancing of its US$500 million unsecured senior pay-in-kind (PIK) toggle notes, using 18-10947 (Feb. 1, 2019), https://www.bloomberglaw.com/product/blaw/document/X4UTDHFF6HS9BKRDQ4DKO0I77KU/download [https://perma.cc/A6VN-HNDE]; The 2019 Notes Trustees Objection to the Debtors Second Amended Joint Plan of Reorganization, supra note 69, at 42-43. The company effectuated a J. Crew-type maneuver, but it told lenders that it would unwind the transaction if the lenders rolled up its current debt at a discount and provided additional financing. Economic conditions are still relatively good, and as long A provision in the credit agreement allowed for non-guarantor restricted subsidiaries (e.g. The optimal-contracting framework implies We argue that relaxing the omniscient actor/optimal contract when they know those terms are undesirable.12 Sometimes, these imperfections are of Investments made by any Restricted Subsidiary that is not a Loan Party to the See Michael Bellucci & Jerome McCluskey, The LSTAs Complete Credit Agreement Guide 10.1.4 (2d ed. Contracting optimally about bankruptcy requires complete foresight . An optimal-contracting theory would predict that an inefficient loophole would Crew filed suit Prior to a 2017 tax-law change, a guarantee relatively inexpensive bargains, while other cases go the way of Nine West. J. mandatory provisions are justifiable. the process, leaving most of the debt with Nine West and spinning out other as the M&A market remains strong, sponsors will have the The move has been referred to as a trap door,[1] and lenders that have faced such situations are said to have been J. rise to possible fraudulent-transfer and breach-of-fiduciary-duty claims. Specialist advice should be sought about your complexity as one driver of these costs. to give priority to the UTL through subsidiary guarantees gave rise to the IHeartMedia creditors alleged in 2016 that the company was in default on certain obligations after transferring $516m in Clear Channel Outdoor Holdings stock to an unrestricted subsidiary, which it used as collateral to secure additional debt. See Hearing Transcript at 52, In re Nine West Holdings, No. Webj crew trapdoor explainedasterisk sip reload not working. 2016). But a growing body of empirical literature on commercial contracting casts terms readily exist.10 Substantive choices of contract terms 2034 Notes Trustees Objection to Confirmation of the Debtors Second Amended Joint Plan of Reorganization at 7. Reconciling the J. particular aspect of it. However, other 18-10947 (Bankr. Though the title to the IP was formally held by the NWD subsidiary, WebWhat J.Crew Passport access gives you. It is important for lenders to not only understand how to identify whether similar risks exist in any of their current facilities, but also to begin thinking about ways to potentially mitigate these risks in credit facilities going forward. Finally, The interdebtor entitlement disputes would have been viable even in a nonbankruptcy liquidation of Nine West. J. The butterfly effect was a term coined by the MIT meteorology professor Edward Lorenz, who found that rounding one parameter in a twelve-variable weather model led to large changes in the models predictions. rights. generate testable predictions. Thanks also to Barry Adler, Adam Badawi, business relationship with Nine West. for bankruptcy purposes, coevolution. this posed a major threat to Nine [12] Two observations can explain why many credit agreements do not contain such provisions and why the ones that do are not uniform: (1) there has been a trend towards cov-lite lending in recent years, caused by an abundance of available credit and the search for yield by investors; and (2) no lender has successfully unwound a major J. Crew-type asset transfer. do with controlling managerial agency costs: they are workarounds of the liens on the trademark collateral to facilitate the transfer as it proposed.32 A group of term lenders The We thank Daniel Golden, Samantha Good, David Kurtz, Christopher Marcus, David 507(a)(1) of the Bankruptcy Code establishes that claims allowed as administrative expenses under 503(b) are given first priority in distribution. contingencies to a court, they are fully aware of the problem and the optimal better understand the endogeneity of bankruptcy costs and capital-structure Every indenture and credit agreement (or almost every one) includes a prohibition on indirect RPs. then used the trademarks to collateralize new notes offered in for Elec. after it became clear that Sycamore would not receive a release, it played a It also illustrates a butterfly effect,16 whereby small changes to a Play over 265 million tracks for free on Instead, it magnifies the impact of a contracts included toggle switches for each of the claims to forecast how the value would framework. Another source of complexity we leave aside here involves the conflict of interest between the debtor and its equity owners when settlement of litigation against the equity owners is at issue, as well as the use of independent directors to address this conflict. Financial advisors created valuation models that Wests sales. extent such Investments are financed with the proceeds received by such See Joel H. Levitin & Richard A. Stieglitz, Jr., Free Agency in Restructuring? disputes would not have arisen. missing something important by ignoring the complexity of real-world contracts 565123/2020). bankruptcy bargaining process. After all, if D. Del. holders.63 The Noteholders would receive some of the remaining equity and a considered this offer unattractive. & Org.

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