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

The recent up-tick in covenant lite financings in the European leveraged loan markets has caused some in the investor community to express concern about what impact it will have when the debtor becomes distressed. This article examines the causes of the recent trend, and dispels some of the myths about covenant lite in the context of a restructuring.

Continue Reading The Resurgence of Covenant Lite, and What it Means for the Restructuring Market