In his latest article for The Bankruptcy Strategist titled, “Landmines in Bankruptcy Practice, Part II,” Schulte Roth & Zabel of counsel Michael L. Cook discusses deadlines, leave to appeal and direct appeals in relation to several appellate courts’ recent decisions. 

The Fifth Circuit affirmed the denial of a party’s motion for an extension of time to fite his notice of appeal, explaining that the party had “not shown that his notice of appeat reached the cterk before the deadline.” In re Porter Development Partners, LLC, 2023 WL 7381439 (sth Cir. Nov. 7, 2023). The court had previously dismissed the party’s earlier appeal from a grant of summary judgment against him because of a “late filing.” ld. at *1. On this appeal, the party argued “that his notice of appeal of the summary judgment order arrived before the filing deadline, but the clerk could not find it for several days, and thus he should not be penalized for the late fíling.”

Read more about the recent decisions and the article here.

Schulte Roth & Zabel partner Jennifer Dunn spoke with Private Equity Law Report following the SEC’s adoption of final rules for private fund advisers (“Rules”), which introduce significant reporting and disclosure requirements on private fund managers. 

Jennifer provided high-level observations on the macro-level ramifications and takeaways from the Rules, specifically reflecting on grandfathering provisions, which were included in the Rules, even though they had been omitted from the proposed. However, the SEC limited the grandfathering rights it authorized, including only certain restricted activities and preferential treatment provisions, but unavailable for disclosure obligations in side letter arrangements. 

Jennifer noted that the SEC acknowledged comments that all requirements under the Rules should be grandfathered. “In rejecting that comment as it applied to disclosure obligations, they focused on the fact that it is more beneficial to all investors to have enhanced transparency than it is to grant legacy status to the disclosure obligation,” she stated.  

Read more here.  

Schulte partner Doug Mintz spoke with journalist Bailey McCann for the Chief Investment Officer article titled, “Is Private Credit Starting to Show Some Stress?” Doug discussed the rapidly growing private credit market and the increasing risk that credit standards will decline. He stressed that investors – not just managers – will want to be especially focused on doing their due diligence on those deals, to make sure they are comfortable with the risks non-bank lenders are taking. He added that diligence is also important because private debt really has not yet experienced a significant downturn, so it is not totally clear how these funds will react.  

Doug stated that “[t]he challenge with private debt is that its rise as an asset class has happened over the past 10 years, and the last meaningful period of distress was over 15 years ago. So people are coming into this without a frame of reference. I think investors will want to focus on due diligence if they want to manage risk.” 

Read more here. 

Schulte Roth & Zabel partner William Barbera spoke with Wall Street Journal reporter Peter Rudegeair on the heels of the SEC’s newly adopted rules which broaden its definition of what it classifies as a securities “dealer” in the article, “SEC Increases Oversight for Hedge Funds, High-Speed Traders.” 

Terms of the rule have been debated with opponents warning that proposed guidelines would negatively impact the industry hampering investment strategies and limiting market activity, especially in US Treasurys. The SEC, in response to industry concerns, elected not to adopt the more controversial aspects of the proposed rule, although the impact of the remaining tests on the private funds industry remains to be seen. 

William provided feedback on the final rule, stating, “My initial reaction is that the SEC actually listened to commenters as the most problematic aspects appear to have been omitted.” 

Read the full article. 

Schulte Roth & Zabel partner Doug Mintz was featured in the latest issues of Turnarounds & Workouts where he discussed the restructuring activity of 2023 and shared his insights on what is in store for the restructuring industry in 2024.  

He explained how the firm saw an uptick in restructuring activity in 2023 and introduced the special situations team to strategically address the massive market changes. Doug also detailed how increased liquidity in the market has led to higher credit costs and interest rates. He stated that the biggest challenge facing restructuring advisers is the ever-accelerating nature of the restructuring process. While this acceleration creates opportunities for more creative dealmaking, it also comes with its own set of challenges.  

Doug also shared his perspective on the potential outcome and impact of the Harrington v. Purdue Pharma L.P. Supreme Court matter, which he considers one of the most important bankruptcy matters of 2023. He said the case could reshape corporate accountability and affect the ability of victims to seek redress.  

Learn about the firm’s Business Reorganization Group here and the Special Situations Group here.