In a discussion with Debtwire for their article titled, “TMT liability management exercises scare creditors with dastardly terms,” Schulte Roth & Zabel partner Doug Mintz shared timely insights. 

The technology, media and telecom sectors are experiencing an uptick in LME activity with at least 11 companies conducting LMEs, including distressed exchanges or drop-downs, according to Debtwire. Advisers and investors predict more such transactions, with about 20 firms considered potential candidates, and several creditor groups already established. 

Doug forecasts future impacts to the industry stating, “I see more LMEs coming in telecom and the TMT world. There’s a lot of debt that’s coming due, a lot of companies that are underperforming, and capital structures that probably need refurbishing.” 

Read more here. 

In his latest article for The Bankruptcy Strategist titled, “Appellate Court Provides Practical Guide to Commercial Landlord’s Bankruptcy Damage Claims,” Schulte Roth & Zabel of counsel Michael L. Cook discusses the Southern District of New York’s decision in In re Cortlandt Liquidating LLC.

The District Court affirmed a bankruptcy court’s holding that the statutory cap on a landlord’s damage claim [i.e., Bankruptcy Code § 502(b)(6)] “applies to [its] claim against a [Chapter 11] debtor-guarantor.” In re Cortlandt Liquidating LLC, 2024 WL 1301429, *3 (S.D.N.Y. Mar. 26, 2024) (emphasis added). Although the tenant-affiliate of the debtor-guarantor was not a Chapter 11 debtor, it had vacated the leased premises and delivered the keys to the lessor one month after its affiliates (including the guarantor) filed their Chapter 11 petitions. The court also held that the non-debtor tenant had “terminated” the lease “for purposes of” the statutory damages cap; the cap should also be calculated in accordance with the “time approach”, not the “rent approach”; the proceeds of a letter of credit security deposit taken from the debtor-guarantor’s “assets” had been properly applied to reduce the lessor’s capped claim; and that “cleanup costs” related to the non-debtor tenant’s premises were “subject to” the statutory damages cap. The court’s decision, supported by a well-reasoned bankruptcy court decision, 648 B.R. 137 (Bankr. S.D.N.Y. 2023) (Wiles, B.J.), provides a helpful overview of the most recent law governing landlords’ damage claims in bankruptcy cases.

Read more here.

Schulte Roth & Zabel co-managing partner Marc Elovitz recently spoke with The Wall Street Journal for their article, “Court Hands Private Equity, Hedge Funds a Win on SEC Fee Rules.”

The US Court of Appeals for the Fifth Circuit struck down a set of SEC rules that intended to govern the terms private equity and hedge fund firms set with their investors. The rules, which were issued last year, aimed to increase transparency around the disclosure of fees and limit preferential deals for certain clients. 

In relation to the Court’s pivotal actions, Marc explains, “In the past, regulated industries, particularly the private funds industry, have been loath to be at odds with their primary regulator.” The Court’s ruling “vindicates the approach that if something is harmful to the economy and to the industry and lacks a basis, then challenging it in court may be necessary at times.”

The Court stated that the SEC lacked the authority to enforce those rules and found that the statute the SEC relied upon when determining the new rules only applied to retail customers, not private funds. As a result, the SEC is reviewing the decision and identifying next steps, potentially including an appeal to the US Supreme Court. 

Read the article here.

“Without going so far as to speak of euphoria at this stage, the biotechnology sector has seen a succession of major mergers and acquisitions since the beginning of the year, reflecting the desire of major pharmaceutical companies to strengthen their pipeline. Jeito Capital, a biopharmaceutical fund based in France, is part of this trend.”

Read Anthony Paronneau’s commentary on this trend in Wansquare.