Creditors' Rights

Goldberg Kohn's Bankruptcy & Creditors' Rights Group began as an adjunct to the firm's internationally renowned Commercial Finance practice. Representing secured creditors, both as agents in syndicated transactions and as individual lenders, the firm has negotiated, documented and litigated intercreditor agreements, complex forbearance agreements to facilitate workouts, DIP financing agreements and orders (including takeout, roll-up, hybrid and new financing orders), cash collateral orders, exit financings, and going-concern and liquidating asset sale agreements. As counsel to unsecured creditors, Goldberg Kohn regularly represents landlords, other lessors, vendors, intellectual property rights holders and subordinated debt holders.

Representative Matters

• Sexy Hair LLC (C.D. Cal.)
  Goldberg Kohn represented Bank of Montreal (“BMO”) in BMO’s capacity as administrative agent for a syndicate of senior lenders to Sexy Hair LLC (“SH”). The firm was retained to represent BMO following a payment default and engineered the exercise of remedies by BMO to replace the SH board of directors with an independent board. Thereafter, the new board of directors, supported by BMO, elected to pursue a sale of the business after restructuring negotiations with the equity sponsor and subdebt holder failed to produce a proposal acceptable to senior lenders. The sale process ultimately led to an acceptable offer and after considering out of court and UCC sale alternatives, a decision was made to effectuate the sale through bankruptcy. Goldberg Kohn represented BMO throughout the bankruptcy including in connection with plan confirmation. The existing lenders (led by BMO) agreed to provide exit financing to the purchaser of the SH business which was effectuated through a plan of reorganization. The exit facility provided by BMO and the prepetition lenders was subsequently refinanced resulting in an overall full recovery to BMO and the senior lenders.
• Giordano's (N.D. Ill.)
  Lead counsel to Fifth Third Bank, N.A. as lender to Chapter 11 debtors, consisting of multiple real estate borrowers, company owned stores, the franchisor of Giordano's pizza restaurants, the product distribution company and related entities. Owner lost control of companies in favor of a Chapter 11 trustee; the trustee then terminated the owner's employment and commenced an orderly sale process of the real estate and restaurant businesses, hiring William Blair and Hilco as investment banker and real estate disposition specialist, respectively. Ultimately, a sale was approved by the bankruptcy court for a price sufficient to repay the lender's loans in full.
• Heads and Threads  (N.D. Ill.).
  Represented JPMorgan Chase Bank N.A. as senior lender group agent in the workout and assignment for benefit of creditors of a major fastener distributor. Goldberg Kohn orchestrated a forbearance process that enabled the orderly liquidation of collateral to repay the banks in full and generate a large pool of recovery for other creditors.  In the midst of this several month process, the borrower executed an assignment for benefit of creditors. To enable operations to continue and maximize recovery, Goldberg Kohn documented the addition of the Illinois common law Assignee to the senior revolving loan facility.  Goldberg Kohn also represented the bank group agent in connection with a suit brought by a vendor seeking to reclaim inventory.
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• UAL Corporation (N.D. Ill.)
  Represented U.S. Bank, N.A. (successor to State Street Bank) as indenture trustee for trusts that financed more than 300 of United Airlines' aircraft and held about $9 billion of claims. The financings involved both leases and sales subject to security interests. Goldberg Kohn engaged in extensive negotiations and litigation of issues arising under §§ 1110 (protection of aircraft financiers' exercise of contracted remedies), 363 (use of property and cash collateral) and 365 (assumption and rejection of equipment leases) of the Bankruptcy Code, and was involved in the negotiation and consideration of the plan of reorganization. Goldberg Kohn took the lead in litigation with the debtor and the creditors' committee of their allegations that the indenture trustee and beneficiaries had violated both the antitrust laws by collectively negotiating with the debtor and the bankruptcy court's injunction against the client's exercise of remedies protected by § 1110. The firm obtained two opinions from the United States Circuit Court of Appeals for the Seventh Circuit, completely vindicating the client's position. (See United Airlines, Inc. v. U.S. Bank N.A., 406 F.3d 918 (7th Cir. 2005), and United Airlines, Inc. v. U.S. Bank N.A., 409 F.3d 812 (7th Cir. 2005)). For a description of that litigation, see Ronald Barliant, "United's Long Journey into the Far Reaches of § 1110," 23 The Bankruptcy Strategist 1 (Nov./Dec. 2005).
• RWJ Management Co. (N.D. Ill.)
  Retained as insolvency counsel by M&I Marshall Ilsley Bank, later acquired by BMO Harris Bank, N.A.,  Chapter 11 debtors operate 10 BP branded gas stations in Chicago area and Indiana. The Debtors filed bankruptcy with significant cash on hand and disputes over its use led to three separate adequate protection trials over the span of four months. Goldberg Kohn fully prepared for each of these trials (including document requests, depositions, and pretrial briefing) on an expedited basis and each time succeeded in improving terms of cash collateral use, including cash payments, cramdown waivers, surcharge waivers, and enhanced collateral reporting and diligence.
• Carlisle Engineered Products (N.D. Ohio)
  Represented the senior secured lender to a pair of Tier I and Tier II automotive suppliers with manufacturing locations spanning several states, Canada and Mexico, which serviced a highly-fragmented customer base. The firm installed an orderly process that provided funding from the client and the largest customers to enable a company-led wind-down and sale. Over several months, and in several orchestrated stages, participations were sold to key customers, favorable accommodation and access agreements were secured and the client's exposure was carefully managed. The process culminated in full repayment of the client, including all principal, fees, interest and expenses, while providing a significant surplus for distribution to unsecured creditors.
• Crown Simplimatic (D. Del.)
  Represented the agent for the senior bank group in connection with the Chapter 11 bankruptcy of a multi-national manufacturer of bottling lines. Goldberg Kohn was involved in several sales of U.S. assets and subsequent litigation with one of the purchasers, as well as going-concern sales and liquidations of assets in the UK, Germany, Belgium and Mexico that required the firm to resolve complex international intellectual property issues. 
• Philips Services Corporation (S.D. Tex.)
  Represented the agent to a multi-tranche, senior, secured credit facility that included affiliates of Cerberus and Carl Icahn. Goldberg Kohn created and implemented a complex financing arrangement that included the partial use of cash collateral coupled with a loan provided by Icahn's affiliate that was senior in priority to a portion of the prepetition debt and junior in priority to another portion of the debt. The loan enabled the company to continue to operate as a going concern on a dual-track basis toward either a sale or a plan of reorganization, and effectively required payment of the client's outstanding debt as a condition of any sale or plan. A contested sale to Icahn's affiliate was approved and the holders of the senior tranche of the prepetition facility were paid in full in cash pursuant to a plan approved in the U.S. and in an ancillary proceeding in Canada.
• Colts Run and Mt. Zion (N.D. Ill.)
  Represented PNC Bank N.A. as senior secured lender in two related Chapter 11 cases of developers of large apartment complexes in Kentucky. Goldberg Kohn acted as lead trial counsel in evidentiary valuation hearings and argued objections to the plans of reorganization. After the firm blocked confirmation of the plans and were pursuing motions to modify the automatic stay it reached settlements expected to result in payment in full to the clients, secured by deposits of deeds into escrows and a consensual plan incorporating the settlement terms.
• Robotic Vision Systems Inc. (D. N.H.)
  Retained to represent an affiliate of Equity Group Investments, the investment company owned and controlled by Chicago investor Sam Zell. The client was the senior, secured lender to a public company that commenced a voluntary Chapter 11 case in New Hampshire. Goldberg Kohn negotiated a resolution of a contested cash collateral motion and motion for the appointment of a Chapter 11 trustee. By agreement, the CEO was removed and replaced by a "person in control" under Delaware law, a rarely used alternative to a Chapter 11 trustee. The new officer subsequently consummated two sales of business divisions (which the former CEO refused to approve), resulting in the payment of all principal and interest owed to the client. The case also involved complex intercreditor issues with Intel Corporation (which also provided postpetition financing) and Export-Import Bank of the United States.

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