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Debtor Representations

Return to Practice Description

Goldberg Kohn represents debtors in complex reorganizations. For example, the firm has represented the manufacturer of steel fabricating machines faced with mass tort and environmental liabilities, a wireless telecommunications company and a manufacturer and distributor of consumer products in Chapter 11 cases in Delaware and Wisconsin. Confirmation of plans of reorganization in those cases occurred in 11 months, 5 months and 75 days, respectively, and resulted in one 70% distribution and two 100% distributions to unsecured trade creditors.

Representative Matters

  • Airadigm Communications, Inc. (W.D. Wis.)
    Represented Airadigm, which operates a wireless telecommunications network in the Midwest. Like similar telecommunications companies, it acquired spectrum licenses from the FCC at auctions under installment payment agreements. Over the vigorous objections on many grounds by the FCC, and following a contested hearing, Goldberg Kohn obtained confirmation of a plan of reorganization (five months after filing) that crams down the FCC's claim. The plan also consensually restructures the claim of Airadigm's principal secured creditor through a debt-for-equity exchange and contains a non-consensual release of claims against that secured creditor. As part of the confirmation process, Goldberg Kohn presented and cross-examined expert witnesses at a three-day trial on the valuation of the licenses. The firm achieved a very favorable result when the judge found on the basis of the cross-examination that the FCC's expert testimony was entitled to no weight at all. The United States Court of Appeals for the Seventh Circuit affirmed confirmation of the plan, approving the cramdown and release provisions over the FCC's objections.
  • Home Products International, Inc. (D. Del.) 
    Represented a national manufacturer and distributor of home closet and laundry products marketed to mass-merchandisers. As HPI's counsel, the firm negotiated and documented, from term sheet to plan to transaction documents, a pre-arranged plan of reorganization that achieved the exchange of about $110 million of unsecured bonds for 95% of the equity. The plan also provided for a $20 million rights offering that required careful structuring to take advantage of the securities safe harbor provisions of the Bankruptcy Code. Goldberg Kohn documented that rights offering, including preparation of an offering memorandum. In addition to implementing that financial restructuring, the firm also assisted HPI in a major operational restructuring involving the closing of a manufacturing facility, the return of leased machinery and the rejection or renegotiation of real estate and equipment leases. Goldberg Kohn also negotiated and documented both DIP and exit financing and obtained court approval of a program whereby trade claims were paid in full in exchange for favorable credit terms during the case. The firm obtained confirmation of the plan 75 days after filing the case, and closed the transactions less than three weeks after confirmation.
  • Met-Coil Systems Corp. (D. Del.)
    Represented Met-Coil, a manufacturer and marketer of metal forming machines and fabricating equipment. The company faced significant mass tort liabilities and regulatory penalties as a result of alleged groundwater contamination at one of its manufacturing facilities. Goldberg Kohn represented Met-Coil in a Chapter 11 case that resolved those and other issues. Before obtaining confirmation of a plan of reorganization, the firm negotiated comprehensive settlements with (a) the plaintiffs in several class actions, (b) the future claimants' representative, (c) several insurance companies, (d) an indemnitee and co-defendant with Met-Coil in the class actions, (e) both the United States Environmental Protection Agency and the Illinois Environmental Protection Agency and (f) the committee of unsecured creditors. Before arriving at those settlements the firm was required to pursue significant litigation with several of those parties. The plan resulted in a future claims trust (funded largely by the settlements with the insurers and a contribution by the parent) and a channeling injunction that protected the client from post-bankruptcy claims. The plan also provided for a 70% distribution to trade creditors. (For a description of the unique issues dealt with in Met-Coil, see Eric Green and James Patton, "Future Claimant Trusts and 'Channeling Injunctions' to Resolve Mass Tort Environmental Liability in Bankruptcy: The Met-Coil Model," 22 Emory Bankr. Dev. J. 157 (2005)).
  • Ritchie Multi-Strategy Global, LLC. (N.D. Ill.) 
    Represented a hedge fund in the successful defense of a petition for involuntary bankruptcy relief. The defense required Goldberg Kohn to present a detailed and sophisticated analysis of the fund's operating agreement and related documents. The firm prevailed over investors who argued that they had the rights of creditors because they had attempted to redeem their interests. The case attracted national attention because of the risk that hedge funds could be forced into bankruptcy. As a result of Goldberg Kohn's marshaling of evidence and arguments, the bankruptcy court dismissed the petition.
  • Sentinel Management Group, Inc. (N.D. Ill.)
    Represented an investment fund that suffered a meltdown when it announced that it was unable to honor redemptions because it could not mark its investments to market and therefore could not determine the value of its holdings. Goldberg Kohn was thrust into a chaotic situation and successfully restored order, resisting requests for emergency injunctive relief by individual investors that would have prejudiced other investors and representing the company in the filing of a Chapter 11 petition and its request for the appointment of a trustee. Additionally, the firm, in litigation with the SEC, obtained an order of court authorizing Sentinel to distribute some funds to investors at risk of going out of business without those funds.

Attorneys At Law

55 East Monroe Street
Suite 3300
Chicago, Illinois 60603-5792
Tel: 312.201.4000
Fax: 312.332.2196
Email: info@goldbergkohn.com

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