The Daily Docket: Caesars Restructuring Hits a Snag

Category: Bankruptcy Law
Published: Friday, 30 January 2015
Written by Admin

Caesars Entertainment Corp . may have violated federal law when it shuffled its casino assets, said a federal judge in a ruling that could complicate the casino company's efforts to unload $18.4 billion in debts in a bankruptcy restructuring of its largest unit, The Wall Street Journal reports.

(Daily Bankruptcy Review is a daily newsletter with comprehensive coverage and analysis of emerging and in-progress insolvencies and turnarounds. For a two-week trial, visit our homepage, scroll to the bottom and click "try for free.")

Two bidders hoping to revive the bankrupt New York City Opera are preparing to square off in court next week at an auction for the opera company's name and assets, WSJ reports.

Hit hard after the Swiss National Bank decided to remove the cap on its currency, FXCM Inc. will receive a $300 million rescue package from holding company for investment bank Jefferies Group LLC that will allow it to meet its regulatory capital requirements, WSJ reports.

Goldman's embrace of Espírito Santo has come back to haunt the Wall Street giant. Weeks after Goldman Sachs Group Inc. arranged an $835 million loan to Banco Espírito Santo SA, Banco Espírito Santo collapsed amid allegations of fraud. Now, Goldman is in an unusual public fight with Portugal's central bank, which bailed out Espírito Santo, over whether the loan should be fully repaid, WSJ reports.

A federal judge encouraged representatives from shuttered Bucksport paper mill owner Verso, buyer American Iron amp; Metal, the workers, potential buyers and the governor's office "to sit down in a room together" and "work something out," The Bangor Daily News reports.

Police on Monday were trying to find the thieves who stole seven gas pumps from several shuttered service stations that were owned by a Long Island man who filed for bankruptcy, CBS New York reports.

The Jones Day law firmlead counsel for the city of Detroit in its historic bankruptcy caseagreed to cut $17.7 million from its legal bills to the city, The Detroit Free Press reports.

The Archdiocese of St. Paul and Minneapolis has become the 12th US Roman Catholic diocese to seek bankruptcy protection in the face of sexual-abuse claims against its clergy, WSJ reports.

Why was Wet Seal's announcement that it was closing more than half its stores an obvious signal that it was about to file for bankruptcy? Professor Stephen Lubben explains on The New York Times ' Dealbook why 2005 amendments to the US Bankruptcy Code means that a bankrupt company has to enter Chapter 11 knowing which stores it wants to keep and which ones it wants to close.

A University of Maryland professor explains why the US Bankruptcy Code isn't working for small businesses and how a panel of experts proposed to fix that, via The New York Times' Dealbook.

Southern Pacific Resource Seeks Bankruptcy Protection in Canada

Category: Bankruptcy Law
Published: Thursday, 29 January 2015
Written by Admin

Canadian oil exploration company Southern Pacific Resource Corp. has sought protection from creditors with an insolvency filing under Canada's bankruptcy law.

Southern Pacific Resource said Wednesday it determined that protection under Canada's Companies' Creditors Arrangement Act was in its best interest, considering the world-wide low oil and gas prices and its own depressed levels of production.

The company added that it...

Denial of plan confirmation and finality - Supreme Court's resolution of ...

Category: Bankruptcy Law
Published: Monday, 26 January 2015
Written by Admin


The Supreme Court has agreed to hear Bullard v. Hyde Park Savings Bank (In re Bullard), US, No. 14-116 (cert. granted 12/12/14). The Court#39;s decision in this case will resolve a circuit split with regard to whether an order denying confirmation of a bankruptcy plan is a final order appealable pursuant to 28 USC. sect; 158(d)(1). The decision has the potential to impact Chapter 13 and Chapter 11 cases.

The statute covering appeals from a district court#39;s or Bankruptcy Appellate Panel#39;s review of a bankruptcy decision, 28 USC. sect; 158(d)(1), vests jurisdiction in US Courts of Appeals from all final decisions, judgments, orders, and decrees entered under 28 USC. sect; 158(a) and (b). Case law and the Bankruptcy Code provide exceptions to the requirement of finality, including orders reviewable under the collateral order doctrine, interlocutory orders regarding injunctions under 28 USC. sect; 1292(a)(1), and orders involving a controlling issue of law as to which an immediate appeal may materially advance the ultimate termination of the litigation under 28 USC. sect; 1292(b). Otherwise, orders must be final to be reviewable.

Finality is a more uncertain concept in the context of bankruptcy appeals, however, than it is in other civil federal appellate contexts. Due to the unique characteristics of bankruptcy proceedings, courts of appeals have adopted the flexibility doctrine to assess finality in bankruptcy.1 This broader definition of finality accommodates the inherent complexity of bankruptcy administration, but it has also led to uncertainty among the courts of appeals and resulted in non-uniform application of bankruptcy laws.


A circuit split on this issue has developed over the last three decades. The majority of circuits hold that an order denying confirmation of a Chapter 13 plan, or a Chapter 11 plan, is not a final order appealable pursuant to 28 USC. sect; 158(d)(1). The First,2 Second,3 Sixth,4 Eighth,5 Ninth,6 and TenthCircuits7 agree that the denial of plan confirmation is not final and appealable because significant further proceedings in the bankruptcy court remain after denial of a plan.8 After denial of plan confirmation, the bankruptcy court#39;s proceedings are not merely ministerial in character: The debtor is free to propose a new plan, to which creditors can object. Alternatively, the bankruptcy court must determine how to dispose of the case if no confirmable plan is proposed. Essentially, the majority rule is that as long as the debtor is free to propose an amended plan, an order denying confirmation is non-final and therefore not appealable. The circuits comprising the majority contend that allowing debtors to appeal the denials of plan confirmation would clog appellate dockets with issues that should be decided elsewhere.9 Finally, as the Respondent in Bullard contends, the Bankruptcy Code provides a mechanism for reviewing the denial of plan confirmations involving unsettled or conflicting issues of the law.10

The minority of circuits, including the Third,11 Fourth,12 and Fifth Circuits,13 holds that an order denying plan confirmation may be considered a final appealable order. The Fourth Circuit took the position that the majority rule is logically inconsistent in that it treats denial of plan confirmation as non-final while simultaneously treating confirmation as final and appealable: if denial of plan confirmation is non-final because the debtor may propose an amended plan before the case is dismissed, then according to the Fourth Circuit, confirmation orders must also be non-final because the debtor whose plan is confirmed may also propose an amended plan.14 The circuits in the minority also reason that the majority rule, which deprives debtors of the option to appeal denial of plan confirmation, effectively leaves some debtors with just two equally unattractive options.15 The first is to file an unwanted or involuntary plan and then appeal that plan, which raises potential standing issues, according to the Fourth Circuit. The other option is for the debtor to dismiss his case and then appeal the dismissal. This option risks losing the automatic stay and could preclude the debtor from filing another petition for six months. The circuits in the minority also note that the majority rule would lead to a waste of time, money, and labor.16 The Petitioner#39;s argument in the case before the Court points out that this potential waste is not only detrimental to cashstrapped debtors, but also to the creditors who have an interest in preserving resources of the bankruptcy estate.


The outcome of the Supreme Court#39;s decision will undoubtedly impact the practice of Chapter 13 bankruptcy cases. Less clear is whether and to what extent the outcome in Bullard will impact the practice of Chapter 11 cases. As the petitioner notes in his brief, no court has distinguished between Chapter 13 and Chapter 11 cases on the issue of whether denial of a proposed plan is afinal order. Settled Chapter 13 issues in other areas of bankruptcy law are similarly applicable to Chapter 11 cases. The impact of the Court#39;s decision in Till v. SCS Credit Corp. is particularly instructive.17 In Till, the Supreme Court settled the issue of discount rates under the cramdown provision of the Bankruptcy Code in the context of Chapter 13, and lower courts have subsequently applied Till in the Chapter 11 context.

Although Bullard presents the issue of whether denial of confirmation is a final order appealable in the context of denial of a Chapter 13 plan, the Court#39;s decision will probably impact the administration of Chapter 11 cases as well. In the absence of a contrary directive, lower courts will be free to apply the Court#39;s ruling in Bullard to Chapter 11 cases.

Caesars bankruptcy venue decision near

Category: Bankruptcy Law
Published: Monday, 26 January 2015
Written by Admin

LAS VEGAS (AP) -- Delaware or Chicago: Troubled casino giant Caesars Entertainment Corp. should find out early next week where a subsidiarys Chapter 11 bankruptcy case will be decided.

Caesars prefers Chicago, where its Caesars Entertainment Operating Co. filed for bankruptcy protection filed Jan. 15. Three creditors prefer Delaware, where they are attempting to push the debt-heavy unit into involuntary bankruptcy and prevent it from proceeding with its own plan.

A Delaware judge is set to decide the venue by Tuesday.

Clearly, venue matters, said Anthony Casey, an assistant law professor at the University of Chicago who specializes in bankruptcy law.

Perhaps the biggest difference might be a debtors chances of limiting lawsuits against both the parent company and its owners, Casey said. Based only on previous cases, that may be easier to do in Chicago than in Delaware, he said.

Caesars has said it sought Chicago because it owns several casino-hotels in the Midwest.

The decision foreshadows what could be a lengthy court fight.

Some first-in-line bank lenders announced this week they had formed a committee to oppose the companys months-long negotiated bankruptcy plan that other creditors had agreed to.

The plan would shed $10 billion in debt from the operations division, leaving it with $8.6 billion and reducing its annual $1.7 billion in interest payments to $450 million. Senior creditors who approved the plan would get cash and new debt.

Fitch Ratings analysts say Caesars also faces legal scrutiny of its actions if a recent ruling against it in New York is any clue.

A federal judge there ruled Jan. 15 that Caesars may have violated the Trust Indenture Act by selling off assets and stripping away investors guarantees without their approval, as alleged by creditors.

Unsecured creditors involved in the lawsuit are owed $530 million, according to the companys financial filings. They point to transfers in August that involved selling valuable assets from Caesars Entertainment Operating Co. -- in which they were invested -- to another division created by Caesars. Then Caesars took away its guarantee on the debt.

We respectfully disagree with the courts ruling, which was based simply on the plaintiffs allegations and that we believe is inconsistent with the provisions of the Trust Indenture Act, Caesars spokesman Stephen Cohen said in an emailed statement. And given the size of the claims at issue and our strong defenses, we do not expect the ruling to impact the planned reorganization.

The case wont proceed against the subsidiary as long as it is in bankruptcy, but it could against the parent company. Caesars Entertainment Operating Co. could seek an injunction to stop lawsuits against its related companies.

The companys plan, drawn up with its most senior creditors, would allow business as usual at its hotel-casinos. Caesars operations division has been burdened by debt that stemmed from a buyout in January 2008.