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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, to the bankruptcy of PG&E, Cravath lawyers have been there. In 2019, the Firm was named “Restructuring Advisory Firm of the Year” by The Deal, which recognized Cravath’s work representing The Weinstein Company “through one of the most high‑profile Chapter 11 cases of the year,” noting the Firm’s ability “to preserve the value of an unusual and complicated set of assets.”

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 Board Advisory, M&A, Financing 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), debtor-side representations, 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:

PG&E Corporation
Cravath is representing PG&E Corporation as principal advisory counsel in corporate matters related to its Chapter 11 proceedings, including the arrangement of its $5.5 billion DIP financing and as lead counsel in related wildfire litigation. Following a comprehensive review, PG&E initiated voluntary reorganization proceedings under Chapter 11, through which it intends to address its responsibilities to stakeholders and achieve an orderly, fair and expeditious resolution of potential liabilities resulting from the unprecedented 2017 and 2018 Northern California wildfires.

The Weinstein Company
Cravath is representing The Weinstein Company Holdings LLC (“TWC”) in connection with its voluntary petition for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware. In connection with the filing, the company entered into a “stalking horse” agreement with an affiliate of Lantern Asset Management, under which Lantern agreed to purchase substantially all of the assets of TWC, subject to certain conditions including approval of the Bankruptcy Court. On May 8, 2018, the Bankruptcy Court approved the sale of the assets of TWC to Lantern for $310 million in cash plus the assumption of up to $127.5 million in liabilities. Following a $21 million purchase price reduction which the Bankruptcy Court approved on July 11, 2018, the sale to Lantern closed on July 13, 2018. Closing this transaction in the face of significant business difficulties and pressure from the purchaser and various creditor constituencies was a true testament to the Firm’s seamless integration of restructuring and M&A expertise.

Commonwealth of Puerto Rico
Cravath represented the Federal Emergency Management Agency and the U.S. Department of the Treasury, as special counsel, in connection with structuring and negotiating community disaster loans proposed to be made available to the Commonwealth of Puerto Rico and the U.S. Virgin Islands, and/or their instrumentalities and agencies or local governments thereof, at a time when the Commonwealth of Puerto Rico and a number of its instrumentalities have filed for bankruptcy relief under Title III of the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA). The loans are provided in accordance with the Additional Supplemental Appropriations for Disaster Relief Requirements Act, 2017 to supply $4.9 billion in emergency loans to Puerto Rico and the U.S. Virgin Islands to assist in providing essential services and other needs as a result of Hurricane Maria.

Ceasars Entertainment
Cravath represented a group of holders of first lien notes of Caesars Entertainment Operating Company, Inc. (“Caesars”) in connection with the implementation of certain modifications to the capital structure of Caesars upon its emergence from Chapter 11. As part of its plan of reorganization (the “Plan”), Caesars implemented an “OpCo/PropCo” structure. To optimize the post‑emergence capital structure of PropCo, a real estate investment trust known post‑emergence as VICI Properties, Inc., Cravath structured with the debtors and an Ad Hoc Committee of First Lien Noteholders the mandatory conversion of certain convertible preferred equity and junior mezzanine debt into common equity of the REIT, as well as the terms of certain debt‑for‑equity elections contemplated by the Plan. Caesars announced its emergence from bankruptcy on October 6, 2017.

Pacific Drilling
Cravath is representing Credit Suisse as sole book-running manager and initial purchaser of $1 billion of first and second lien notes issued by Pacific Drilling S.A. to finance its exit from bankruptcy. Committed bond financing as bankruptcy exit financing is not typical and required close coordination between Cravath’s FR&R and Capital Markets groups for a seamless and successful execution.

Energy Future Intermediate Holding Company LLC
Cravath represented the independent manager of Energy Future Intermediate Holding Company LLC (“EFIH”) on conflict matters in connection with the $18.8 billion sale of Oncor Electric Delivery Company to Sempra Energy and in the related $49 billion Chapter 11 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.

YRC Worldwide, Inc.
Cravath has represented Credit Suisse since 2014 in connection with a $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 $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.

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 Stores 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 Stores 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.

Brookfield Asset Management Inc.
Cravath represented Brookfield Asset Management Inc. in connection with its $1.3 billion acquisition of TerraForm Global, Inc. The Firm also represented Brookfield in connection with its $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 2016. This complex transaction—two public company transactions coupled with a Chapter 11 “megacase”—required close and effective coordination between Cravath’s FR&R and M&A teams.

MF Global Holdings, Ltd
Cravath represented Allied World Assurance Company, a Bermuda‑based insurer, in an adversary proceeding brought in New York federal bankruptcy court by successors to the estate of MF Global Holdings to recover on excess insurance policies. Entering the case at a pivotal moment, when Allied World was being held in contempt of court over jurisdictional conflicts between U.S. and Bermuda courts, the Firm successfully moved to compel arbitration in Bermuda, Allied World’s home jurisdiction. This precedent‑setting victory clarified that a retention‑of‑jurisdiction provision in the plan of liquidation—even one that purported to retain the bankruptcy court’s jurisdiction to adjudicate adversary proceedings—did not override the parties’ pre‑petition contractual choice to arbitrate. Cravath successfully defended this ruling when MF Global sought leave to appeal.

UCI International, LLC
Cravath represented 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 $469 million in funded indebtedness at the time of its bankruptcy filing, including approximately $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 the debtor 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.

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.

Energy & Exploration Partners, Inc.
Cravath represented Credit Suisse, as administrative agent and collateral agent, in connection with a $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 $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 $775 million term loan facility provided to ENXP prior to its Chapter 11 filing.

Lehman Brothers Holdings Inc.
Cravath represented Credit Suisse and several of its U.S. and non‑U.S. subsidiaries as creditors in connection with the Lehman bankruptcy over losses arising from the early termination of over 30,000 derivative trades. The Lehman estate filed an adversary complaint to reduce, disallow or expunge Credit Suisse’s claim, and seeking to recover over $150 million from Credit Suisse for the benefit of Lehman’s other creditors. After extensive discovery in multiple countries, including over 100 depositions, the parties reached a settlement, approved by the bankruptcy court in July 2018, providing the Credit Suisse creditors with allowed claims of $385 million for derivative claims and $363 million for guarantee claims. These are the largest and perhaps most complex reorganization cases in history.

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 $300 million in exit financing to the City upon its emergence from its Chapter 9 bankruptcy case.

Select Staffing
Cravath represented Credit Suisse in connection with a $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 $50 million DIP facility to finance Select Staffing’s operations during the bankruptcy proceeding.

Niko Resources
Cravath represented Niko Resources Ltd., as borrower, in connection with $340 million in rescue financing. Prior to this transaction, Niko Resources was financially distressed and was in immediate need of financing for working capital. This transaction involved guarantee and collateral packages in Barbados, Bermuda, Canada, the Cayman Islands, Cyprus, Trinidad and Tobago and the United States.

ATP Oil & Gas Corporation
Cravath represented Credit Suisse as administrative agent and collateral agent under the $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 $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 $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.

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).

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.

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 $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 $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.

Tropicana Entertainment, LLC
Cravath represented Credit Suisse as agent under the $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.

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.

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