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Message from the Chair:
Dear Colleagues and Friends:
In this final 2016 edition of The Business Advisor, we have included three articles which discuss recent decisions of import to business bankruptcy practitioners in chapter 11 and chapter 15 cases. As we discuss in the first article, the Supreme Court will be deciding whether the "structured dismissal" of a chapter 11 case passes muster under the Bankruptcy Code in its review of the Third Circuit Court of Appeals decision in Jevic. In another recent (and perhaps unanticipated) decision, the Third Circuit Court of Appeals has agreed with the bondholders' position in Energy Futures that "make-whole" premiums are indeed collectible, notwithstanding the acceleration of the debt upon a chapter 11 filing. We also discuss how bankruptcy and maritime law intersected in the tumultuous chapter 15 case filed by the Korean foreign representative of Hanjin Shipping Co. in the District of New Jersey. Finally, in a fourth article focused on our healthcare insolvency practice, we share with you the "takeaways" from a recent PCO engagement related to a continuing care retirement community.
Please join us in welcoming Howard Cohen, our new FR&CR Director in Wilmington. We are pleased that our FR&CR practice continues to grow in the District of Delaware, where the vast majority of middle-market chapter 11 cases are filed. All of our attorneys continue to be engaged in a myriad of professional and community experiences that enrich our practices and our lives. We are thankful for the recognition of our efforts bestowed upon us by our clients and peers and appreciate the opportunities afforded us by our profession and our colleagues.
As 2016 comes to a close, we wish all of our readers a holiday season that is safe and healthy, and success in the New Year.
Karen A. Giannelli, Esq.
Chair, FR&CR Department
GIBBONS EXPANDS FR&CR PRACTICE IN DELAWARE
Howard Cohen, Formerly of Drinker Biddle & Reath, Joins Firm in Wilmington
Gibbons is pleased to announce the arrival of Howard A. Cohen, who joined the firm's Wilmington, Delaware office as a Director in the Financial Restructuring & Creditors' Rights Department in September. Most recently, Mr. Cohen was a partner in the Corporate Restructuring Group at Drinker Biddle & Reath LLP in Wilmington, where he represented debtors, creditors' committees, indenture trustees, post-confirmation trusts, chapter 7 and 13 trustees, and individual creditors in complex bankruptcy cases. Mr. Cohen earned his J.D. from Duke University School of Law and his B.S. from Florida State University. He is admitted to practice in Delaware and in the U.S. District Court for the District of Delaware. He is an active member of the Delaware Bankruptcy Inn of Court.
Gibbons has long maintained a premier insolvency practice from its headquarters in the District of New Jersey and is highly regarded by both the bench and the bar in this practice area. Our Financial Restructuring & Creditors' Rights (FR&CR) Department boasts a well respected, growing national practice while also leveraging the firm's significant foothold in the Mid-Atlantic region, particularly in the District of Delaware – one of the preeminent corporate bankruptcy venues in the country. Our FR&CR Department's core group of attorneys has broad and exceptional experience in this complex and sophisticated practice area, which includes debtor, creditor, and fiduciary representations in federal bankruptcy cases; pre-bankruptcy "workout"/insolvency counseling; and related state court litigation involving receiverships, attachments, replevins, and commercial foreclosure actions. We have the versatility of having represented all major constituencies in chapter 11 cases, and our robust business bankruptcy practice is supported by cutting-edge firm-wide resources and skilled multidisciplinary teams in numerous related practice areas.
ARTICLES & CLIENT ALERTS
Chapter 11 Lawyers Anxiously Await the Supreme Court's Decision in Jevic
By: Karen A. Giannelli
On December 7, 2016, the Supreme Court heard oral argument on its certiorari review of the decision of the U.S. Court of Appeals for the Third Circuit in Czyzewski v. Jevic Holding Corp., 15-649 (Sup. Ct.) ("Jevic"). Jevic is generating much interest and discussion among chapter 11 lawyers, as it presents a case in which the Court's decision could impact the use of "structured dismissals" as an alternative to the more traditional ways to resolve chapter 11 bankruptcy cases.
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Third Circuit Upholds Make-Whole Payments in Energy Future Holdings Corp.
By: Howard A. Cohen
Make-whole premiums are a common yield protection feature of fixed rate bonds that remove a borrower's incentive to refinance the bonds if interest rates drop. Many lenders bargain for such premiums because they must carefully match investment income to maturing liabilities. On November 17, 2016, the U.S. Court of Appeals for the Third Circuit (the "Third Circuit") reversed the decision of the U.S. Bankruptcy Court for the District of Delaware (the "Bankruptcy Court"), and held that Energy Futures Intermediate Holdings Company LLC and EFIH Finance Inc., (collectively, EFIH), is required to pay make-whole payments to its noteholders. In re Energy Future Holdings Corp., 16-1351, __ F.3d (3d Cir. Nov. 17, 2016).
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Bankruptcy, Maritime Law, and the Holiday Season Collide in In re Hanjin Shipping Co., Ltd.
By: David N. Crapo
As media reports have made clear, the shipping industry is not exempt from financial turmoil. On August 31, 2016, Hanjin Shipping Co., Ltd. ("Hanjin") filed an application to commence a bankruptcy proceeding in the Republic of Korea. A commencement order was entered the following day. On September 2, 2016, Tai-Soo Suk, the foreign representative of Hanjin, filed a chapter 15 bankruptcy petition in the United States Bankruptcy Court for the District of New Jersey ("Bankruptcy Court"), seeking the recognition of Hanjin's bankruptcy case in Korea as a foreign main bankruptcy case, as well as certain protections including a stay of actions against either Hanjin or its assets in the United States.
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A Patient Care Ombudsman for a CCRC: Takeaways
By: David N. Crapo
The Great Recession was particularly unkind to continuing care retirement communities (CCRCs). Many who had hoped to retire to CCRCs were unable to do so as the value of their homes and investments plummeted. The result was CCRCs with nonviable censuses. Hebrew Hospital Senior Housing, Inc. ("HHSH") operated Westchester Meadows, a CCRC in Valhalla, New York, and was one of the CCRC victims of the Great Recession. HHSH filed its voluntary chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the Southern District of New York ("Bankruptcy Court") on December 9, 2015. HHSH was one of three related debtors, each of which entered bankruptcy on a different date.
DEPARTMENT HONORS & AWARDS
Gibbons FR&CR Department Attains National and Regional Rankings in Best Lawyers
The FR&CR Department was regionally ranked in the 2017 edition of Best Lawyers in the categories of Bankruptcy and Creditor Debtor Rights/Insolvency and Reorganization Law category and Litigation – Bankruptcy category. In addition, FR&CR Department attorneys Dale E. Barney, David N. Crapo, Karen A. Giannelli, and Frank J. Vecchione were selected for individual inclusion.
PROFESSIONAL ACTIVITIES
Upcoming Events
Natasha Songonuga, a Director in the FR&CR Department, is the coordinator of a panel for the 19th Annual New Jersey Bankruptcy Bench Bar Conference (March 10, 2017) on the topic, "Distinguishing Joint Administration From Substantive Consolidation: Section 1129(a)(10) Per-Debtor or Per-Plan Approach to Confirmation in Multi-Debtor Chapter 11 Cases."
Howard A. Cohen and Natasha Songonuga are members of the Delaware Bankruptcy American Inn of Court and will be participating in the 2016-2017 program. The Inn strives to promote skill improvement, professionalism, and legal ethics through its monthly informative programs, mentoring system, and development of detailed materials prepared for each program. Each monthly program revolves around a series of lectures, skits, or other creative avenues of discussing a specific topic of current interest to bankruptcy attorneys.
David N. Crapo, Counsel in the FR&CR Department, has been invited to give a presentation, Developing and Maintaining a HIPAA Compliance Program for Lawline, on June 5, 2017.
Recent Events
Karen A. Giannelli, Chair of the FR&CR Department, presented a panel entitled, "Using Chapter 11 of the United States Bankruptcy Code to Address Mass Tort Liabilities" at the 2016 New Jersey Defense Association Products Liability seminar, held at the APA Hotel Woodbridge on September 23, 2016.
On September 29, 2016, David N. Crapo moderated and spoke on a panel entitled, "Privacy and Security: the Year of Ransomware and Phase II HIPAA Audits," at the Cybersecurity & Privacy Law Conference sponsored by the New Jersey Institute for Continuing Legal Education (NJICLE). On December 2 and December 12, 2016, Mr. Crapo moderated a seminar entitled “HIPAA Update 2017: Recent Developments and What’s on the Horizon,” also sponsored by NJICLE.
Mr. Crapo recently completed his appointment as Patient Care Ombudsman for the skilled nursing and assisted living facilities operated by a continuing care retirement community that was a debtor in a chapter 11 bankruptcy case before the United States Bankruptcy Court for the Southern District of New York. See related article here.
Karen A. Giannelli and David N. Crapo contributed updates for 2016/2017 to the "Non-Bankruptcy Claims" (Chapter 14) of the Bankruptcy Litigation Manual, published annually by Aspen Law & Business.
DEPARTMENT NEWS
Mark Conlan, a Director in the FR&CR Department, was recently appointed to the Mediation Panel of the U.S. Bankruptcy Court for the District of Delaware.
Natasha Songonuga, a Director in the FR&CR Department, was appointed as the guardian ad litem to two young boys in a pro bono case pending in the Family Court of the State of Delaware. Ms. Songonuga recently won an argument before the court to have the older child, who is only five years old, reevaluated by a psychiatric and undergo a medication re-evaluation to ensure the number and dosage of psychotropic medications currently prescribed is appropriate given his age.
Ms. Songonuga also serves as a member of the Governance Committee of the Delaware Fund for Women. The Governance Committee is tasked with, among other governance issues, laying out the responsibilities of trustees and working toward increasing the breadth and diversity of the Board of Trustees.
Brett S. Theisen, an associate in the FR&CR Department, was selected to serve on the Turnaround Management Association (TMA) New York City chapter's Academic Relations Committee for 2017. TMA is the premier professional community dedicated to corporate renewal and turnaround management.
FIRM NEWS
Gibbons Attains National and Regional Rankings in 2017 Best Lawyers (November 1, 2016)
Gibbons Named One of the Nation's Best Workplaces (October 12, 2016)
Gibbons Welcomes 2016 Fall Associate Class (October 3, 2016)
Gibbons Products Liability Department Named New Jersey Law Journal's Products Liability Litigation Department of the Year (September 16, 2016)
Gibbons Again Named a Top Law Firm on Vault's Annual Survey (August 9, 2016)
American Lawyer Ranks Gibbons 50th Nationwide in Pro Bono Survey (August 3, 2016)
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