Representing Private Equity Sponsors in Bankruptcy Toolkit
Resources concerning strategies, timelines, overviews, and in-depth analysis of issues involving the representation of private equity sponsors before and during bankruptcy proceedings.
Private equity ( www.practicallaw.com/7-382-3708) sponsors should develop strategies and be aware of the benefits and risks of investing in financially troubled companies. The acquisition of an interest in a distressed company in or outside of bankruptcy involves many complex legal issues that must be considered in evaluating these investments. These issues include:
Fiduciary duties ( www.practicallaw.com/7-382-3459) of directors and officers.
Fraudulent conveyance ( www.practicallaw.com/5-382-3498) risks posed by common business transactions, such as:
intercorporate guaranties in loans to corporate groups; and
Risk of having debt claims recharacterized as equity or votes designated as disallowed claims for purposes of voting on a Chapter 11 plan ( www.practicallaw.com/9-382-3694) .
Ability to obtain a third-party release under a Chapter 11 plan or Rule 9019 settlement.
Buying distressed assets or a going concern ( www.practicallaw.com/1-382-3513) in a section 363 sale ( www.practicallaw.com/0-386-0841) , including through a credit bid ( www.practicallaw.com/2-500-6604) .
Acquiring or retaining equity through a rights offering ( www.practicallaw.com/9-503-2058) or debt for equity exchange under a Chapter 11 plan.
Providing DIP financing ( www.practicallaw.com/0-382-3405) .
Negotiating a prepackaged bankruptcy ( www.practicallaw.com/8-501-5101) or lock-up agreement.
This Toolkit contains continuously maintained practice notes, checklists, and standard documents to help develop strategies to protect a private equity sponsor's interests both before and during a bankruptcy proceeding.