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Dan Kamensky
We asked our expert Contributors to weigh in on Exclusive Opportunism – the trend of preserving exclusive financial opportunities for select creditors without offering that opportunity to all creditors of the relevant class — all in exchange for voting in favor of the debtor’s plan. While the Peabody case seemed an outlier at the time, it has since become the go-to strategy for debtors making it the namesake for this inaugural award. Contributor Paul Silverstein provides a high level summary of the issues relating to exclusive opportunism, focusing on potential violations of Section 1123(a)(4) and of the Supreme Court’s decision…
In recent years, a troubling pattern has emerged in how debtors obtain support for plans of reorganization. Increasingly, debtors make, in effect, a side payment to a subset of creditors in the form of an exclusive opportunity to participate in equity or debt financing on favorable terms. This benefits the controlling coalition at the expense of creditors who are not part of it and creates perceived, if not actual, conflicts for management teams (and their advisors). Exclusive opportunism goes hand in hand with other hostile out-of-court restructuring tactics that pit similarly situated creditors against one another. These transactions – whether inside…