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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

  • work Practice Area

    Bankruptcy

Date & Time
  • event Date

    Tuesday, February 7, 2023

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$297.00

This course is $0 with these passes:

CLE
ALL

This CLE course will provide bankruptcy counsel with an examination of recent trends in the use of rights offerings as a financing mechanism, review the rights offerings process under the Bankruptcy Code, and discuss debtor and creditor strategies in negotiating and executing a rights offering.

Faculty

Chad J. Husnick
Partner
Kirkland & Ellis LLP

Mr. Husnick represents debtors, creditors, equity holders, and other stakeholders in all aspects of corporate liability management, restructuring, bankruptcy, and insolvency proceedings. He has represented clients in a variety of industries, including energy, retail, infrastructure, manufacturing, transportation and distribution, hospitality and gaming, real estate, automotive, and printing. Mr. Husnick is a lecturer in the law at the University of Chicago Law School and a contributing author for Collier on Bankruptcy—the leading treatise on bankruptcy law.

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James J. Mazza
Partner
Skadden Arps Slate Meagher & Flom LLP

Mr. Mazza represents debtors, creditors, asset purchasers and private equity investors in corporate restructuring transactions, both in and out-of-court, involving clients’ interests across the globe. His experience extends to a wide variety of industries, including automotive, airlines, energy, financial services, healthcare, gaming, real estate and retail. Mr. Mazza also regularly advises companies’ management and boards of directors regarding fiduciary duty issues in financially distressed situations.

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Description

Rights offerings remain a popular form of bankruptcy financing allowing debtors to emerge successfully from chapter 11. In a rights offering, the current stakeholders (shareholders, bondholders) of the debtor have the opportunity to fund a debtor's emergence from Chapter 11 by purchasing equity issued by the reorganized debtor under its plan of reorganization.

Rights offerings, which are almost always accompanied by a backstop agreement, can encourage plan acceptance by providing stakeholders an opportunity to enhance their recoveries through new investment in the reorganized debtor, at a discount to plan value. Debtors’ equity holders can use a rights offering to protect their original investment from total elimination while avoiding the thorny legal issues arising under a new value plan.

While rights offerings often draw creditor objections, debtors can minimize creditor challenges and maximize their chances of court approval with a well-executed strategy taking into account important case precedent and developing jurisprudence in this arena, as well as consensus building with the relevant constituencies.

Listen as our authoritative panel of practitioners discusses rights offerings in Chapter 11 bankruptcies and strategies for debtors and creditors proposing or objecting to a rights offering.

Outline

  1. Trends in use of rights offerings
    1. Use by senior constituencies to validate plan values
    2. Use by junior participants to raise capital to pay off senior indebtedness
    3. Offensive use by market participants to capture a share of equity at a discount to plan value
    4. Backstop commitments
  2. Structuring the rights offering
    1. Registration exemptions under Section 1145/private placements
    2. Planning and execution
    3. Valuation
  3. Objections from creditors
    1. Market test/valuation
    2. Investor incentives/protections
    3. Unequal treatment

Benefits

The panel will review these and other essential matters:

  • What are the recent trends in the use of rights offerings for restructuring debtors?
  • What are the benefits of a rights offering for the various constituents in a Chapter 11 reorganization?
  • What are the best ways to structure a rights offering to ensure court approval in light of case precedent and evolving jurisprudence?