Bankruptcy Partner Madlyn Primoff Discusses Lender and Debtor Cooperation During Reorganization in The Deal
As appeared in The Deal, Bankruptcy Insider article “Taking the Wheel”
The Deal recently took at look at the Chapter 11 bankruptcy of oil rig operator O&G Leasing LLC, including its battle with secured lender First Security Bank for confirmation of its reorganization plan. As the article explained, First Security, indenture trustee for the debenture holders, not only proposed a rival liquidation plan for O&G but took the “seemingly rare move” of leading an auction of five of O&G's oil rigs in bankruptcy court.
According to Kaye Scholer Bankruptcy & Restructuring Partner Madlyn Primoff, in contrast to the relationship between O&G and First Security, “Sometimes a debtor agrees to let the lender lead and takes a ‘what does it matter anyway’ approach.”
“When the debtor is just ‘shrugging its shoulders’ in such instances, the lender really controls the process anyway, because of its ability to credit-bid its secured debt, as ICM's lenders did. In addition, some debtors are just not competent and capable of running the sale,” Primoff added. "If a price is not achieved that the lender likes, it is going to credit-bid anyway — so debtors may as well let them lead. This wouldn't be my first choice though; it would be my last choice, because assets are generally maximized when debtors and lenders work cooperatively and everyone's interests are aligned.”
Primoff concluded that the lender should want the debtor to be involved because buyers are generally going to want to confer with the debtor and management as part of their diligence process.
Also of Interest
- Tax Alert: Final Debt Regulations Have Limited Scope of Application November 30, 2016 • Client Alerts
- And Now A Word From The Panel: MDL Venue Choices November 30, 2016 • Articles
- Patrolmen’s Benevolent Association Honors Waks November 17, 2016 • Recognitions
- Second Circuit Expands Split on Nominative Fair Use November 16, 2016 • Articles
- JUVE Handbuch Recommends Frankfurt Office and Lawyers November 14, 2016 • Recognitions
- Chambers UK 2017 Recognizes London Partners and Aviation Finance Practice November 7, 2016 • Recognitions
- Kaye Scholer Receives Legal Aid Society’s Pro Bono Publico Award November 4, 2016 • Recognitions
- Lattanzio Receives NYSBA Pro Bono Award November 3, 2016 • Recognitions
- US News–Best Lawyers Recognizes 32 Kaye Scholer Practices and 41 Lawyers November 1, 2016 • Recognitions