Abstracts » Law

When bondholders' votes upset a plan

Article Abstract:

A federal bankruptcy court affirmed in In re National Gypsum Co the right of junior bondholders to vote on a reorganization plan, despite a subordination plan directing that third parties receive payments due the bondholders. Lawyers for the junior bondholders argued that the Bankruptcy Code protects them from such disenfranchisement, citing sections 510(a) and 1126(a). They argued that junior bondholders voting on reorganization plans keep management and senior bondholders from forming coalitions which might preclude junior creditor recovery.

Corporate reorganizations

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Effect of participant's insolvency unclear; litigation continues as to whether creditors can reach plan interests

Article Abstract:

Two recent circuit court decisions have brought forward the issue of a bankrupt individual's interest in a retirement plan. Creditors are seeking to make claims on the pension and profit-sharing plans of bankrupt individuals. While the anti-alienation provisions of the Tax Code and Employee Retirement Income Security Act would seem to conclusively rule out that type of attachment, the circuit court rulings have been contradictory and it is hoped that a Supreme Court decision will resolve this split.

Retirement benefits, Bankruptcy

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A silver lining for unsecured creditors: the insurers; sometimes nondebtor obligors such as insurance companies may satisfy particular claims

Article Abstract:

Unsecured creditors' difficulty in obtaining recovery from bankrupt parties and the possibility of pursuing nondebtor obligors such as insurance companies is discussed. According to the Bankruptcy Code, neither automatic stays nor injunctions against pursuit of pre-petition claims insulate nondebtor third parties from creditors' ckauns,

United States, Bankruptcy reorganizations, Bankruptcy reorganization

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