Hosted by the Business Reorganization Committee

For many chapter 11 debtors, the issuance of new debt and/or equity pursuant to a rights offering is a useful tool to ensure that the reorganized company will have sufficient liquidity upon emergence.  In most cases, the ability to subscribe to all or a portion of a rights offering will be awarded to stakeholders on account of their claims or interests.  However, a key component of a rights offering is a backstop commitment, which is often open only to a small subset of self-selected stakeholders (the “Backstop Parties”).   In exchange for providing the backstop commitment, these Backstop Parties typically receive a separate commitment fee and/or break-up fee, which is often crucial to securing their commitment.  The compensation offered to Backstop Parties was at issue in recent decisions in a number of cases, such as Seadrill, Pacific Drilling, Claire’s, Peabody, and CHC Helicopters.  Non-backstopping stakeholders have challenged the compensation offered to Backstop Parties on a variety of grounds, including that the proposed fees are unreasonable or unnecessary to the reorganization, or give rise to disparate treatment among creditors in violation of the Bankruptcy Code.  This webinar will review the recent decisions, the factors considered by courts in approving compensation for Backstop Parties, and potential alternative ways of structuring rights offerings and the compensation for Backstop Parties.

Tuesday, November 6

This webinar is free to attend and CLE is available in qualifying states.*

SPEAKERS

Rachael Ringer
Kramer Levin Naftalis & Frankel LLP

Justin E. Rawlins
Winston & Strawn, LLP

Douglas Mannal
Kramer Levin Naftalis & Frankel LLP