Description
In reorganizations with contentious or complex creditor constituencies and no obvious way forward, parties may enter into agreements containing lockup provisions to obtain creditor support for confirmation of a Chapter 11 plan or certain designated plan provisions. These agreements can greatly reduce the risks of a bankruptcy filing and provide a clear path forward through an in-court reorganization.
The enforceability of lockup agreements depends on many things, including not violating Section 1125 of the Bankruptcy Code and offering adequate information about a proposed plan. However, they are often attacked as being an impermissible solicitation of creditor votes, manipulation of the plan process, and strong-arm tactics aimed at hamstringing independent creditors. Lockup obligations can affect the rights of other creditors because plan approval proceeds by class and not every creditor may have signed the lockup agreement.
In In re GOL, the bankruptcy court surprised many by rejecting the lockup provisions offered in that case, but then provided new and extensive guidance on the enforceability of lockup provisions.
Listen as this experienced panel of bankruptcy attorneys discusses lessons from In re GOL and offers guidance about the limits of lockup provisions.
Presented By
Mr. Alfano represents creditors and debtors in complex insolvency matters, both domestically and internationally. His practice spans a variety of industries, including aviation and pharmaceuticals.
Mr. Leggett practices in the areas of bankruptcy and complex commercial litigation. His experience includes investigating and prosecuting director and officer liability claims; representing trustees, creditors, equity holders, and debtors in bankruptcy proceedings; federal and state court commercial litigation; and trials in federal, bankruptcy, and state courts nationwide.
Mr. Zahralddin-Aravena is a member of the Corporate, Bankruptcy, Complex Business & Commercial Litigation, Digital Asset, and Ukraine Conflict Response Practices. He is a skilled business lawyer and litigator with significant experience advising clients in corporate and commercial litigation, insolvency, distressed M&A, compliance, corporate law and entity formation, corporate governance, commercial transactions, cyber law, regulatory actions, and cross-border issues. He represents clients in all aspects of bankruptcy and restructuring. He has extensive experience in international commercial law issues, including cross-border insolvency, federal bankruptcy court matters, assignments for the benefit of creditors, and receiverships. His international law experience, particularly in international commercial transactions, brings a unique and nuanced approach to business issues inside and outside distressed situations.
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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Date + Time
- event
Thursday, March 6, 2025
- schedule
1:00 p.m. ET./10:00 a.m. PT
- Provisions for debtors
- Provisions for creditors
- Problematic terms
- Solicitation vs. negotiation
- Giving plan supporters better treatment
- Milestones
- Fiduciary terms
- Drafting best practices
The panel will review these and other key issues:
- What is the difference among a "restructuring support agreement" (or RSA), "plan support agreement" (or PSA), or "lockup agreement"?
- What are the key requirements in Section 1125 that affect enforceability of lockup agreements?
- What happens if the plan contemplated in lockup provisions becomes impossible?
- Can parties agree to oppose plans with certain undesirable provisions?
