Lisa M. Schweitzer

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The following post was originally included as part of our recently published memorandum “Selected Issues for Boards of Directors in 2024”.

As 2023 concludes, economic indicators remain mixed on whether there will be a recession or a soft landing over the next year.  Either way, it is likely that a significant number of companies, across industries, will need to restructure their financial debt and operations.  2023 brought a significant increase in chapter 11 filings, with a 61% percent increase compared to the same period in 2022, and filings across industries, including such notable companies as Bed Bath & Beyond, Envision Healthcare, Rite Aid and WeWork.  Other companies have avoided formal bankruptcy filings by undertaking liability management transactions that increase near-term liquidity through additional borrowings.  However, as several high profile filings this year have shown, it is likely that many of these transactions may simply delay, rather than prevent, bankruptcy filings in the future.Continue Reading One Step Ahead: Restructuring Considerations in an Uncertain Economic Climate

In In re Nine West LBO Securities Litigation, Case No. 20-2941 (S.D.N.Y. Dec. 4, 2020), U.S. District Court Judge Jed Rakoff denied a motion to dismiss claims brought by the Nine West liquidating trustee against former directors of Jones Group (the predecessor to Nine West) for breach of fiduciary duty and aiding and abetting breach of fiduciary duty stemming from a 2014 going-private transaction with private equity sponsor Sycamore Group.  While it remains to be seen whether the defendant directors ultimately will be found liable for such claims, we highlight certain lessons learned and best practices that can be followed in light of the ruling.
Continue Reading Lessons Learned and Best Practices in LBO Transactions Following the Nine West Decision

In the latest turn in the long-running LBO-related fraudulent conveyance litigation brought in connection with the Lyondell bankruptcy,[1] on November 18, 2015, Judge Robert E. Gerber of the U.S. Bankruptcy Court for the Southern District of New York (the “Court”) issued a decision (the “Decision”) on motions to dismiss the intentional fraudulent transfer claims and the state-law constructive fraudulent transfer claims brought by representatives for shareholders of Lyondell Chemical Company (“Lyondell”) against Edward Weisfelner (the “Trustee”), trustee of two trusts established for Lyondell’s creditors.  In re Lyondell Chem. Co., No. 09-10023 (REG), 2015 WL 7272996 (Bankr. S.D.N.Y. Nov. 18, 2015).  The Decision dismissed the intentional fraudulent transfer claims based on the failure to adequately plead the Lyondell Board’s intent to defraud the company’s creditors by entering into the leveraged buyout.  However, the Court left in place the state-law constructive fraudulent transfer claims against former shareholders – notwithstanding securities safe harbors in the Bankruptcy Code that would generally preclude such claims – and, in the process, demarcated the boundaries between intentional and constructive fraudulent transfer claims.
Continue Reading SDNY Bankruptcy Court Reaffirms Rigorous Pleading Standards in Lyondell LBO Fraudulent Conveyance Action