A corporate restructuring and bankruptcy BLOG

    Releases at issue in Boy Scouts, Sungard and Ion add to chapter 11 filings, and muni bond issuance excludes banks that exclude the gun industry

    What's News
    April 15, 2022

    Below is our initial take on recent bankruptcy-related developments:

    Wall Street Banks Face Biggest Texas Loss Yet in Mega Bond Deal | Yahoo Finance

    Municipal-bond underwriters are preparing for what could be the biggest municipal-bond sale in Texas in at least two decades to bail out natural gas utilities impacted by huge financial losses after the deadly February 2021 winter storm.

    S&K Take: There have been several utility bankruptcies relating to Winter Storm Uri involving massive obligations. It is unclear how funds generated by this financing will be distributed or whether this amount can cover the damage. One very interesting note on this though -- some large financial institutions will be cut out of this deal because they curtailed the amount of business that they did with the gun industry. The nuances of provincial interests can have interesting impacts.

    Offshore Tech Co ION Geophysical OK’d to Tap Bankruptcy Loan | Reuters

    A U.S. bankruptcy judge in Houston gave offshore energy technology services company ION Geophysical Corporation temporary court approval for it to access funds to continue operations through its bankruptcy.

    S&K Take: Larger bankruptcy filings continue to roll in, which is good news for professionals in the industry, who saw filings at rock bottom earlier in the year. This case comes with a toggle RSA, using a marketing process to either sell the company or set value (and potentially cram down junior creditors under a plan).

    Tech Company Sungard Files Second Bankruptcy in Three Years | Reuters

    Sungard Availability Services, a cloud services provider, filed for bankruptcy with about $424 million in secured debt, only three years after it emerged from its prior Chapter 11 case.

    S&K Take: This is a chapter 22. Sungard had previously completed a balance sheet restructuring in bankruptcy, and now is back to cure operational woes. Sungard is also seeking to implement a toggle plan which considers either a sale or a conversion of existing debt to equity.

    Future Liability Releases at Center of Boy Scouts Bankruptcy | Associated Press

    Attorneys for the Boy Scouts of America told a Delaware bankruptcy judge that protecting local Boy Scouts councils and troop sponsoring organizations from future liability related to child sex abuse claims is crucial for the organization’s bankruptcy reorganization plan, while attorneys for those opposing the plan argued the liability releases for non-debtor third parties are not fair or necessary.

    S&K Take: Closing arguments in the Boy Scouts conclude this week. Releases are once again at the forefront of contested issues. The Purdue releases are currently being considered by the Second Circuit. The releases in Boy Scouts releases will be considered by Judge Silverstein and will serve as another data point for practitioners. The Boy Scouts releases will be particularly interesting as it is one of the first heavily contested release cases in which professionals have had the benefit of Judge McMahon’s District Court Purdue decision to provide guidance.

    Texas Power Plant Seeks Ch. 11 After 2021 Storm Leads to Lawsuits | Reuters

    Ector County Energy Center LLC, another Texas energy company, has filed for Chapter 11 bankruptcy after being impacted by the deadly February 2021 winter storm in Texas.

    S&K Take: In a story related to the muni bond underwriting described above, another Texas energy company filed, this time in Delaware.

    The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm or its clients, or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.

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