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Practice Overview

Financial Restructuring and Reorganization

Cravath has been at the forefront of restructuring since the early days of the Firm itself, pioneering the reorganization of the nation’s railroad industry and continuing to represent clients in restructuring transactions that have marked pivotal moments in our nation’s history. From the bankruptcy of General Motors, to the City of Detroit’s bankruptcy, to the Republic of Argentina’s historic debt restructuring, Cravath lawyers have been there.

The Financial Restructuring & Reorganization practice draws on our lawyers’ experience handling our clients’ most important and challenging cases and transactions, as well as a deep understanding of the business dynamics involved in finance and restructuring. Clients benefit from our role as a strategic, commercial partner in the face of issues triggered by financial distress or insolvency, receiving complete representation not only from our dedicated restructuring specialists, but also from the Firm’s premier Finance, Board Advisory, M&A and Litigation teams.

Cravath’s substantial experience with reorganization, restructuring and bankruptcy matters includes debtor-in-possession (DIP) and “exit” financing, advising independent directors and boards of directors, distressed and bankruptcy M&A (including Section 363 transactions), advising bondholder and other ad hoc creditor groups and bankruptcy litigation. We also have important experience in the fields of municipal and sovereign restructuring.

On the distressed financing side, in addition to DIP and exit financings, we have expertise in all aspects of balance sheet restructurings, including liability management transactions (exchange and tender offers) and out-of-court loan workout transactions, including recapitalizations and debt-for-equity exchanges. The Firm’s leading M&A lawyers advise independent directors in complex bankruptcy matters and work closely with the Financial Restructuring & Reorganization team on bankruptcy M&A transactions, including representing parties in purchase and sale transactions (including “credit bids”) under Section 363 of the Bankruptcy Code. Our litigators understand how to use the bankruptcy litigation process to further the interests of clients in this specialized context and are as effective in bankruptcy court as they are in other courts across the nation. We also advise corporate clients on bankruptcy issues in a wide variety of commercial contexts, from how bankruptcy provisions might impact their relationships with distressed commercial counterparties to how best to structure transactions to mitigate bankruptcy risk.

Cravath also has a history of pro bono representation in the restructuring space, representing the City Council of Harrisburg, Pennsylvania, on the advisability of filing a municipal bankruptcy case under Chapter 9 of the Bankruptcy Code and helping Harrisburg evaluate its debt restructuring alternatives.

Representative Financial Restructuring & Reorganization matters include:

Republic of Argentina
Cravath represented the Republic of Argentina in connection with its historic sovereign debt litigation settlement and restructuring. Argentina defaulted on approximately $80 billion in sovereign debt in 2001 and had since restructured most of its debt over the next decade, but many “holdout” bondholders continued to litigate their claims. Cravath was retained as new counsel in February 2016 to represent the Republic in resolving the 15‑year holdout litigation. Following expedited proceedings before both the U.S. District Court for the Southern District of New York and the U.S. Court of Appeals for the Second Circuit, Cravath obtained the vacatur of extraordinary injunctions that had been imposed on Argentina in 2012 and 2015 in March 2016. The Second Circuit affirmed the relief in April 2016 after a rare ruling from the bench immediately following oral argument, which paved the way for Argentina to return to the global capital markets for the first time in 15 years.

In addition to the Firm’s role as litigation counsel, Cravath also acted as special counsel to Argentina in connection with its $16.5 billion bond offering, the largest emerging markets debt issuance in history at the time of the offering. The Cravath team helped coordinate the complex settlement payment mechanics among the Republic, the bond underwriters and the lead settling plaintiffs, as well as the bond offering and the court processes in its important return to the international capital markets.

General Motors Corporation
Cravath acted as counsel to the independent directors of General Motors Corporation, in connection with the Company’s filing of the largest industrial Chapter 11 case in history and the sale of its principal operating assets in a Section 363 sale approved by the bankruptcy court. Given the importance of GM to the U.S. economy and the political importance of this case, effective board advisory counsel was important to achieve a successful outcome.

Brookfield Asset Management Inc.
Cravath represented Brookfield Asset Management Inc. in connection with its US$1.3 billion acquisition of TerraForm Global, Inc. The Firm also represented Brookfield in connection with its US$3.8 billion acquisition of a controlling stake in and assumption of sponsorship of TerraForm Power, Inc. TerraForm Global and TerraForm Power own and operate clean renewable energy assets acquired from SunEdison, Inc. and other third‑party partners worldwide. SunEdison and certain of its subsidiaries (not including TerraForm Global and TerraForm Power) filed for Chapter 11 bankruptcy in April 2016 in the largest U.S. bankruptcy filing of the year. This complex transaction—two public company transactions coupled with a Chapter 11 “megacase”—required close and effective coordination between Cravath’s restructuring and M&A teams.

Stage Stores, Inc.
Cravath represented Stage Stores, Inc., through its operating subsidiary Specialty Retailers, Inc., in connection with its acquisition of select assets of Gordmans Stores, Inc. through a Bankruptcy Code section 363 transaction. Under the terms of the transaction, the Stage Store subsidiary will, subject to exceptions in the purchase agreement, acquire a minimum of 50 Gordmans store leases, with rights to assume leases for an additional seven stores and a distribution center, and, on April 7, 2017, the Stage Store subsidiary acquired all of Gordmans’ inventory, furniture, fixtures, equipment and other assets at the 57 store locations and the distribution center as well as trademarks and other intellectual property of Gordmans.

Stanley Black & Decker, Inc.
Cravath represented Stanley Black & Decker, Inc. in connection with its acquisition of the Craftsman brand from Sears Holdings Corporation. The transaction provided Stanley Black & Decker with the rights to develop, manufacture and sell Craftsman‑branded products in non-Sears Holdings retail, industrial and online sales channels across the U.S. and in other countries. The Firm’s Financial Restructuring  & Reorganization team advised Stanley Black & Decker on bankruptcy structuring matters related to the transaction, including with respect to intellectual property licensing issues. Following the initial signing of the transaction, Cravath’s restructuring team has continued to advise Stanley Black & Decker in connection with issues related to financial disclosures made by Sears Holdings, as well as with respect to the filing for insolvency protection by Sears Canada under the Canadian Companies’ Creditors Arrangement Act.

UCI International, LLC
Credit Suisse, as lender, collateral agent and administrative agent of the senior secured asset‑based revolving credit facility (ABL) provided to UCI International, LLC and certain of its affiliates in connection with financing and litigation matters relating to UCI’s Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware. UCI, a subsidiary of Rank Group Ltd., is a motor vehicle parts and systems business that had approximately US$469 million in funded indebtedness at the time of its bankruptcy filing, including approximately US$69 million in drawn borrowings under its ABL facility, under which the two lenders were Credit Suisse AG, Cayman Islands Branch and an affiliate of Rank Group. Despite various proposals by debtors that would have led to Credit Suisse being impaired on its debt and subject to post‑confirmation litigation, UCI and its affiliated debtors emerged from Chapter 11 in December 2016, with lenders under the ABL facility receiving a hundred cents on the dollar repayment and Credit Suisse receiving litigation releases.

MF Global Holdings, Ltd
Cravath is representing Allied World Assurance Company, Ltd, a Bermuda‑based insurer, in an adversary proceeding brought in United States Bankruptcy Court for the Southern District of New York by successors to the estate of MF Global Holdings, Ltd to recover on excess insurance policies. Cravath was retained to represent Allied World as lead counsel in the Bankruptcy Court and on appeal following certain rulings against Allied World. The complaint alleges that MF Global and its successors are entitled to certain insurance policy limits and consequential damages. Following Cravath’s retention, Allied World secured an order compelling arbitration of the dispute in Bermuda.

Energy & Exploration Partners, Inc.
Cravath represented Credit Suisse, as administrative agent and collateral agent, in connection with a US$40 million DIP term loan for Energy & Exploration Partners, Inc. (“ENXP”). Judge Russell Nelms, of the U.S. Bankruptcy Court for the Northern District of Texas, approved access to the financing, which was provided on a superpriority, priming basis. The proceeds were used to repay an interim US$10 million DIP loan approved on December 9, 2015 and to fund working capital and general corporate purposes during the pendency of ENXP’s bankruptcy case. ENXP filed for bankruptcy on December 7, 2015, citing a sharp and protracted period of depressed commodity prices. The Firm represented Citigroup in arranging a US$775 million term loan facility provided to ENXP prior to its Chapter 11 filing.

YRC Worldwide, Inc.
Cravath has represented Credit Suisse since 2014 in connection with a US$700 million term loan credit facility provided to YRC Worldwide, Inc. as part of a successful comprehensive recapitalization transaction. Following the initial funding of the term loan facility, Cravath has continued to advise Credit Suisse, including as arranger for two successful covenant relief amendments obtained for YRC (most recently in January 2017), as well as an important US$600 million refinancing/maturity extension transaction in July 2017. This maturity extension of the term loan facility was an important liability management transaction for YRC as it allowed YRC to focus on addressing other upcoming maturities and avoid a “springing” maturity of its asset‑based loan facility.

YPF S.A.
Cravath is representing YPF S.A., the Argentine state‑owned oil and gas company and parent company of Maxus Energy Corp., before the U.S. Bankruptcy Court for the District of Delaware. Cravath was retained by YPF following an amendment to Maxus’s proposed Chapter 11 plan of confirmation that anticipates post-confirmation litigation claims will be asserted against YPF regarding YPF’s alter ego liability for Maxus’s liabilities.

Lehman Brothers International (Europe)
Cravath represented a major financial institution in connection with a matter relating to a significant amount of post‑petition interest on claims arising from terminated ISDA swaps in the Lehman Brothers U.S. bankruptcy case and the related U.K. insolvency administration of Lehman Brothers International (Europe). The matter involved complex cross‑border legal issues relating to statutory surplus entitlements, including issues relating to ISDA default rate calculations and questions regarding applicability of statutory versus contractual interest rates. The resolution of the matter was reported to the Joint Administrator of Lehman Brothers International (Europe) (in administration) on August 2, 2017.

ATP Oil & Gas Corporation
Cravath represented Credit Suisse as administrative agent and collateral agent under the US$617.6 million senior secured super-priority DIP credit agreement for ATP Oil & Gas Corporation, which filed a Chapter 11 case in the U.S. Bankruptcy Court for the Southern District of Texas in August 2012. ATP was a major exploration and production company with more than US$2 billion in debt. What started as a DIP financing matter wound up as a full-scale bankruptcy M&A transaction when the reorganization and sale processes proved to be unsuccessful. The Firm’s Financial Restructuring & Reorganization team seamlessly pivoted, and guided Credit Suisse and the lenders under the DIP financing in all aspects of their “credit bid” for, and acquisition of, substantially all of ATP’s assets in a Section 363 transaction, including with respect to the formation of Bennu Oil & Gas LLC as the credit bid vehicle and corporate governance and regulatory matters, enabling the lenders to successfully take ownership of the productive ATP assets by November 2013.

Travelport
Cravath represented Credit Suisse in connection with the financial restructuring of approximately US$3.8 billion of debt incurred by Travelport and certain of its subsidiaries in the U.S., U.K., Bermuda and the Cayman Islands. The transactions were part of a comprehensive recapitalization that included the incurrence of first and second lien term loans and the consummation of various exchange offers in respect of existing high‑yield bonds and PIK term loans for new debt.

Lehman Brothers Holdings Inc.
Cravath is representing various Credit Suisse affiliates as creditors in the Lehman Brothers bankruptcy in connection with claims in excess of US$1 billion related to derivatives trades on which Lehman defaulted when it filed for bankruptcy in 2008.

The Firm is also representing Credit Suisse Securities (USA) LLC and Credit Suisse Securities (Europe) Ltd. in an adversary proceeding brought by Lehman Brothers Special Financing Inc. in the U.S. Bankruptcy Court for the Southern District of New York to recover payments allegedly received by Credit Suisse entities from investments in Lehman-sponsored synthetic collateralized debt obligations.

Energy Future Intermediate Holding Company LLC
Cravath is representing the independent manager of Energy Future Intermediate Holding Company LLC (“EFIH”) on conflict matters in connection with the US$49 billion bankruptcy of the largest electric utility in Texas. The Firm advised on a broad range of potential inter-debtor claims pertaining to the Chapter 11 bankruptcy of Energy Future Holdings Corp. and affiliated companies, including EFIH, many of which represented potential loss or gain contingencies. In December 2015, the Court approved a comprehensive settlement of all the inter-debtor claims.

Barnes & Noble, Inc.
Cravath represented Barnes & Noble, Inc. in connection with its acquisition of substantially all intellectual property and related assets from Borders Group, Inc. in a Section 363 transaction. This transaction involved both complex worldwide IP licensing issues and navigation of the Bankruptcy Code’s special provisions relating to the sale of “personally identifiable information” and related consumer privacy ombudsman provisions (including successfully addressing the privacy concerns of the New York Attorney General and the Federal Trade Commission through court-approved “opt out” procedures).

City of Detroit, Michigan
Cravath represented Barclays Capital as post‑petition lender to the City of Detroit, Michigan, in the City’s municipal bankruptcy case under Chapter 9 of the Bankruptcy Code. The financing, authorized under the Bankruptcy Code, was structured under a Bond Purchase Agreement of secured super-priority notes from the City. The City’s bankruptcy was the largest municipal bankruptcy in history, and the financing was the first post‑petition loan transaction in a municipal bankruptcy case. The Firm also represented Barclays in providing US$300 million in exit financing to the City upon its emergence from its Chapter 9 bankruptcy case.

Detroit Institute of Arts
Cravath was retained by the Detroit Institute of Arts (the “DIA”) to advise and represent it in the City’s Chapter 9 bankruptcy. A central element of the plan for the City to exit the bankruptcy was a settlement relating to the DIA, representing the city’s largest asset. Over the course of the case, the Firm helped the DIA develop a strategy and the legal arguments necessary to protect its 60,000+ item art collection from creditors, obtain valuations of the collection, develop expert testimony showing why liquidation of the collection (valued somewhere between US$2 billion and US$8 billion) would have yielded only a fraction of its aggregate appraised value, negotiate relevant portions of the plan and represent the DIA at the trial in September and October 2014 in Detroit on plan confirmation. Under the now-approved plan, the DIA’s collection will remain intact, and ownership of the art will pass from the City to the DIA to hold in trust in perpetuity for the people of Detroit and Michigan.

Tropicana Entertainment, LLC
Cravath represented Credit Suisse as agent under the US$1.4 billion senior secured credit facility in the Chapter 11 cases of Tropicana Entertainment, LLC and certain of its subsidiaries, and in connection with the credit bid by Credit Suisse, as agent on behalf of a group of secured lenders, for the acquisition of the Tropicana Casino & Resort in Atlantic City, New Jersey, through a Section 363 sale.

Tronox Incorporated
Cravath represented Credit Suisse in the Chapter 11 cases of Tronox Incorporated, a manufacturer of titanium dioxide and electrolytic and other specialty chemicals, and its subsidiaries. Credit Suisse arranged, and was the administrative agent for, a US$125 million super-priority asset-based DIP financing facility for Tronox and was the administrative agent under a US$450 million prepetition senior secured credit facility. The Firm also represented Credit Suisse and the other secured lenders as defendants in fraudulent transfer litigation brought in New York federal court by a group of creditors that sought to avoid transfers and obligations pursuant to a US$200 million secured debt facility, among other claims. A settlement was reached pursuant to which Cravath’s clients recovered all but US$5 million of the amount due under the facility.

Entegra Power Group, LLC
Cravath represented Credit Suisse International in connection with a complex restructuring involving the conversion of an interest rate swap provided by Credit Suisse International to Entegra Power Group, LLC into a second-lien loan with modifications to the payments “waterfall.” The transaction required close coordination between the Firm’s restructuring and litigation teams to reach a negotiated resolution and a global restructuring solution in a complex multiparty setting.

New York City Off-Track Betting Corporation
Cravath represented New York City Off-Track Betting Corporation in its Chapter 9 bankruptcy petition and related litigation. Objections to the petition were filed by the New York Racing Association, which manages the Belmont and Aqueduct racetracks, and certain other creditors. The U.S. Bankruptcy Court for the Southern District of New York held that, as a New York State public benefit corporation, New York City Off-Track Betting Corporation was eligible to file for bankruptcy under Chapter 9 of the Bankruptcy Code and, as a matter of New York constitutional law, Governor Paterson was empowered to authorize the filing by an Executive Order that he issued. The Court also ruled that New York City Off-Track Betting Corporation negotiated in good faith with creditors before filing, that such negotiations were impracticable and that New York City Off-Track Betting Corporation filed its bankruptcy petition in good faith.

Interstate Bakeries Corp.
Cravath represented an affiliate of Ripplewood Holdings LLC in its acquisition under a Chapter 11 plan of Interstate Bakeries Corp., the iconic maker of Wonder Bread® and Hostess Twinkies®. The acquisition involved four levels of exit financing, at a time when the financial crisis made exit financing particularly difficult to obtain, as well as shareholder agreements and stock appreciation rights agreements.

JPMorgan Chase Bank
Cravath secured a favorable settlement for JPMorgan Chase Bank as plaintiff in its action against Luxor Capital on an important issue in syndicated lending concerning the use of a tiered method in distributing the proceeds of a bankruptcy estate when the funds in the estate are insufficient to repay the syndicate.

PricewaterhouseCoopers
Cravath obtained the dismissal of two separate securities class actions against the Irish PricewaterhouseCoopers firm in federal courts in New York and Florida brought by investors in funds that lost money in Madoff’s Ponzi scheme. Both actions, seeking a total of US$4.1 billion in damages, were dismissed on forum non conveniens grounds, and the dismissals were affirmed on appeal.

Lyondell Chemical Company
Cravath represented Goldman Sachs Lending Partners in its capacity as prepetition secured creditor and DIP facility lender to Lyondell Chemical Company and certain of its affiliated debtors. Lyondell Chemical’s US$8.015 billion DIP facility was one of the largest DIP financing packages in history. The Firm also represented affiliates of Goldman Sachs in adversary proceedings in which Lyondell creditors sought the avoidance of nearly US$20 billion in loans made by Goldman Sachs and other banks. All claims against Goldman Sachs were resolved through a settlement approved by the bankruptcy court.

Astrata Group, Inc.
Cravath represented Tridex Technologies and an affiliate in an adversary proceeding brought by the litigation trust of Astrata Group, Inc. seeking in excess of US$380 million in damages for alleged breaches of fiduciary duty, interference with contractual relations and misappropriation of trade secrets. At the motion-to-dismiss stage, the Firm achieved dismissal with prejudice of all claims against Tridex.

Freedom Communications, Inc.
Cravath represented JPMorgan Chase Bank, N.A. in the out-of-court negotiation relating to the senior secured credit facility for Freedom Communications, Inc., a diversified media company holding print publications and television broadcast stations. Following Freedom Communication’s Chapter 11 filing, the Firm represented JPMorgan Chase Bank and a steering committee of lenders in connection with litigation over the use of cash collateral and adequate protection, the negotiation and documentation of the Chapter 11 plan of reorganization and the exit financing for the reorganized company.

Select Staffing
Cravath represented Credit Suisse in connection with a US$370 million credit facility provided to Koosharem, LLC (d/b/a Select Staffing) to finance its exit from a “prepack” bankruptcy proceeding. The Firm also represented Credit Suisse as agent under a US$50 million DIP facility to finance Select Staffing’s operations during the bankruptcy proceeding.