Corporate Bankruptcy

As many Credit Slips readers will know, chapter 11 venue reform has been an issue for decades. As corporate filers have flocked to the Southern District of New York and the District of Delaware, the real reason some observers say is that these courts favor corporate managers, dominant secured lenders, bankruptcy attorneys, or a combination of all of them. Regardless of the merits of these claims, it certainly undermines respect for the rule of law when faraway federal courts decide issues affecting local interests.

My inbox is being bombarded with law firm commentary on the Court of Appeals for the Second Circuit's decision that cramdown interest rates should be determined by "market rates," rather than by formula, when the relevant debt market is efficient.

Toys "R" Us filed for bankruptcy with impeccable timing--the very morning I was teaching my Financial Restructuring class about the commencement of the bankruptcy process. I decided to take my class through the TRU petition on PACER. Some 19 TRU entities filed in the Eastern District of Virginia, Richmond division. Only one of those 19 entities is a Virginia entity. I don't know the domicile of the other entities, but TRU is headquartered in New Jersey, and I'd be shocked if there wasn't at least one Delaware entity in the family.  

A historic vote was announced overnight that signals a new era for large pension reform. As is often the case, "reform" here means that ordinary, hard-working folks will suffer a significant amount of pain as big companies are relieved of some liabilities, but the hope is it will be less painful than the alternative.

Following his appointment of Steven Mnuchin as Treasury Secretary, the President has nominated Joseph Otting, former CEO of OneWest Bank, to be the chief federal bank regulator as head of the Office of the Comptroller of the Currency.