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handshakes behind closed doors

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Our Take:

In an era already marked by concerns over forum shopping and perceptions of debtor-friendly courts, a presiding judge appointing himself to mediate a case pending before that same judge raises serious questions about transparency, impartiality, and due process.

Federal judges are rightly held to the highest ethical standards, including judicial canons governing impartiality, ex parte communications, and the appearance of fairness. Those standards exist to preserve public confidence in the integrity and neutrality of the judiciary.

Even with party consent, mediating a matter that may later return to the same judge for adjudication is highly problematic. That is precisely why, to our knowledge, bankruptcy courts almost universally refer mediation responsibilities to another judge or independent mediator. Once a judge receives confidential settlement communications, discusses litigation risk in private caucuses, or signals views on the merits, difficult questions inevitably arise as to whether true impartiality can be maintained if settlement efforts fail.

This is not a Solomonic exercise in “splitting the baby” or cutting through the Gordian knot. Modern notions of due process and judicial fairness demand clearer separation between mediator and adjudicator.

"Exclusive Opportunism" and the Cooperation Agreement

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Our take:

Co-ops are shaping up to be the next frontier of creditor-on-creditor violence. Tiered structures are already emerging - most recently in the CDK Global situation - where select lenders secured access to non-pro-rata treatment. The market has already started pricing in this SteerCo / non-SteerCo divide, with spreads widening roughly 8 points between the two CDK papers.

The next evolution will likely be the “LMification” of co-op agreements themselves. Certain lenders will look to monetize access to preferential treatment; others will inevitably push the boundaries too far; litigation will follow; and, eventually, the market will circle back to more consensual co-op structures.

The irony is hard to miss: co-ops were originally designed to promote lender unity and prevent non-pro rata treatment, yet they are increasingly becoming the mechanism through which those very divisions are created.

the imminent rise of Chapter 15

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Synthetic unsubs...

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Greece wins GDP warrants dispute; Argy up next....

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From LME to to bankruptcy.... once again...

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Our Take:

?Trinseo completed a restructuring lawyer's dream transaction: a Pari-plus double dip dropdown ("PPDDD" - scariest 5 letters an analyst can see). In the end, the complexity didn’t change the outcome: there was simply insufficient cashflow to outrun the capital stack, and financial engineering only extended the timeline rather than solving the underlying operational gap. 

Liability Management on pace with years past...

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rolling straight into chp11

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