Our Bankruptcy and Creditors' Rights Group began as an adjunct to its internationally renowned commercial finance practice. Representing secured creditors both as agents in syndicated transactions and as individual lenders, we have 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.
Selected Engagements:
Carlisle Engineered Products (N.D. Ohio) Goldberg Kohn 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. We installed an orderly process that provided funding from our 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 our client's exposure was carefully managed. The process culminated in full repayment of our client, including all principal, fees, interest and expenses, while providing a significant surplus for distribution to unsecured creditors.
Crown Simplimatic (D. Del.) Goldberg Kohn represented the agent for the senior bank group in connection with the Chapter 11 bankruptcy of a multi-national manufacturer of bottling lines. We were 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 us to resolve complex international intellectual property issues.
Philips Services Corporation (S.D. Tex.) Goldberg Kohn represented the agent to a multi-tranche, senior, secured credit facility that included affiliates of Cerberus and Carl Icahn. We 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 our 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.
Robotic Vision Systems Inc. (D. N.H.) Goldberg Kohn was retained to represent an affiliate of Equity Group Investments, the investment company owned and controlled by Chicago investor Sam Zell. Our 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 our client. The case also involved complex intercreditor issues with Intel Corporation (which also provided postpetition financing) and Export-Import Bank of the United States.
Rockford Products Corporation (N.D. Ill.) Goldberg Kohn advised the senior, secured lender to Rockford Products, an automotive parts supplier, concerning myriad legal and financial issues. From the large PBGC lien that was filed against Rockford Products less than a month after closing the prepetition loan, to the threat of the borrower's largest customers resourcing their business, the seven months between loan closing and loan repayment were challenging. However, Goldberg Kohn leveraged its workout and bankruptcy expertise with its automotive industry experience to coordinate a going-concern sale pursuant to DIP financing provided by Goldberg Kohn's client. After intense negotiations with potential buyers, key customers and the unsecured creditors' committee, Goldberg Kohn created an exit transaction that repaid its client in full at closing.
The Thaxton Group (D. Del.) Goldberg Kohn represented FINOVA Capital Corporation, the principal secured lender to Thaxton, which was in the insurance and consumer finance industries. FINOVA's $112 million in secured claims were vigorously contested by the debtor, the creditors' committee and subordinated note bondholders holding $120 million in claims. In the bankruptcy court, in addition to negotiating a cash collateral order, we represented FINOVA in a four-day trial of the committee's motion to substantively consolidate the debtors, opposed motions to equitably subordinate FINOVA's claims and contested confirmation of the debtors' plan. We thwarted all of the attacks on our client's position en route to a successful settlement. Goldberg Kohn litigators also defended FINOVA in five securities fraud class actions in state and federal courts in four states, successfully arguing before the United States Circuit Court of Appeals for the Fourth Circuit against class certification. Thereafter, Goldberg Kohn deflected the noteholders' efforts to file a mass action with over 1,600 individual plaintiffs, forcing the plaintiffs to file individual actions if they wanted to continue the litigation. The plaintiffs did not do so, effectively ending the securities litigation and leading to the successful settlement with FINOVA, a recovery of a substantial portion of FINOVA's claims against the Thaxton estate and the confirmation of a consensual plan.
UAL Corporation (N.D. Ill.) Goldberg Kohn represented U.S. Bank, N.A. (successor to State Street Bank) as indenture trustee for trusts that financed more than 300 of United's aircraft and held about $9 billion of claims. The financings involved both leases and sales subject to security interests. We 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 were 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 our client's exercise of remedies protected by § 1110. We obtained two opinions from the United States Circuit Court of Appeals for the Seventh Circuit, completely vindicating our 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).
Wickes, Inc. (N.D. Ill.) Goldberg Kohn represented Merrill Lynch Capital, a Division of Merrill Lynch Business Financial Services, Inc., as senior, secured prepetition and postpetition lender. Wickes was a publicly traded lumber company, with operations in several states. Having failed to restructure its prepetition bond debt, Wickes commenced a Chapter 11 case to pursue strategic alternatives, including a sale of its assets. Goldberg Kohn negotiated and documented a $100 million DIP loan to be used to repay Merrill Lynch's prepetition debt and provide working capital for Wickes during its bankruptcy case. Wickes sought subsequently to prime Merrill Lynch Capital with a DIP facility from another lender. On a highly expedited basis, Goldberg Kohn filed an objection to the priming motion, prepared a supporting expert witness and successfully discredited Wickes' witnesses at trial. Goldberg Kohn's efforts culminated with the withdrawal of the priming motion and an expedited sale process that repaid, in full, Merrill Lynch Capital's loans.