Enforceability of Intercreditor Agreements in Bankruptcy: Maximizing Recovery for First and Second Lienholders
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Banking and Finance
- event Date
Tuesday, October 22, 2024
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
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This 90-minute webinar is eligible in most states for 1.5 CLE credits.
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This CLE course will guide commercial finance counsel in drafting intercreditor agreements and those seeking to enforce or resist intercreditor agreements during bankruptcy proceedings. The panel will discuss ways that first lien and second lien lenders can best protect their economic interests in the event of bankruptcy.
Mr. Dressel represents companies and their stakeholders in a range of distressed transactions and situations, including Chapter 11 reorganizations, out-of-court debt restructurings and recapitalizations, Section 363 and other distressed M&A transactions, and DIP financings, among others. His practice spans a variety of industries.
Mr. Erens has counseled clients for more than 30 years in some of the most complex and cutting-edge chapter 11 cases filed in the country. His practice is focused on corporate restructuring, workout, and bankruptcy matters. Mr. Erens has substantial experience in representing companies, bank groups, other secured and unsecured creditors, committees, asset purchasers, and other interested parties in a wide variety of restructuring matters. He oversees the firm's Business Restructuring & Reorganization team in the Chicago office and is been an adjunct professor at the DePaul University College of Law where he teaches corporate reorganizations.
Bankruptcy courts must often resolve issues regarding the enforceability of intercreditor agreements between first and second lien lenders. An intercreditor agreement executed by first and second lien lenders who have separate credit agreements with the borrower is quite typical.
Section 510 of the Bankruptcy Code states that subordination agreements are enforceable in bankruptcy cases under non-bankruptcy law. Over the years, case law has evolved regarding the enforceability of provisions that restrict (what some courts believe are) fundamental bankruptcy rights.
Listen as the panel of experienced finance and bankruptcy attorneys discusses the forms of intercreditor agreements, current case law on the enforceability of intercreditor agreements in bankruptcy proceedings, and how first lien and second lien lenders can protect their economic interests in the event of bankruptcy.
- Recent case law on the enforceability of intercreditor agreements in bankruptcy proceedings
- Cases holding that an intercreditor agreement cannot waive a second lien lender's fundamental bankruptcy rights
- Cases holding that an intercreditor agreement may waive statutory bankruptcy rights if enforceable as a matter of applicable state law
- Best practices when drafting and negotiating intercreditor agreements to protect lender interests, including discussion of forms of intercreditor agreements currently being used in the market
The panel will review these and other relevant issues:
- What are the lessons for lenders' counsel from recent bankruptcy case law regarding intercreditor agreements?
- Which intercreditor provisions require special attention as to enforceability in bankruptcy?
- How can senior lien and subordinate lien lenders best protect their interests in bankruptcy?
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