Southern pacific funding corporation liquidating trust
To the contrary, as the bankruptcy court noted, it is Spieker's interpretation of § 365(e)(1) that would work a drastic modification of the Indenture in this case, because applying Spieker's logic would wipe out the priority rights of senior debt holders clearly contemplated by the Indenture and elevate unsecured creditors to a level of parity with their secured counterparts. Spieker's misapprehension of section 12.3 and the subordination provisions of the Plan clouds this issue. Spieker erroneously contends that section 12.3 requires SPFC to make payments to the holders of the Notes, who are then obligated to turn over those payments to Senior Indebtedness.
Based on this analysis, Spieker's contention that section 12.3 constitutes a modification of the Indenture conditioned on SPFC's insolvency must fail, because section 12.3 does not operate to alter any of the parties' rights under the agreement. Reserve Statistical Release, Assets and Liabilities of Commercial Banks in the United States (Jan.1998)), filed in the district court.5.
Background In 1996, SPFC entered into an indenture agreement (the “Indenture”) regarding the issuance by SPFC of “convertible subordinated notes” (the “Notes”) in an aggregate principal amount of approximately million. But section 12.3 contains an additional provision that section 12.2 lacks: It provides that in the event of dissolution, liquidation, reorganization, or distribution of assets, any payments to which the holders of the Notes would be entitled, were it not for the subordination provisions, must be paid to the Senior Indebtedness, in addition to any payment to which the Senior Indebtedness is already entitled, until the Senior Indebtedness is paid in full. The provisions of the Plan, as confirmed by the bankruptcy court, mirror the provisions of section 12.3 of the Indenture. It held that enforcement of section 12.3 does not violate § 365(e)(1), because section 12.3 “does nothing to alter the rights or obligations of the debtor.”II. Spieker misapprehends the effect of section 12.3 in claiming that under it, “SPFC is required to make distributions to the Subordinated Noteholders, and they are required to turn those monies over to the holders of Senior Indebtedness.” Section 12.3 does not require SPFC to make any payments to the holders of the Notes; in fact, section 12.3 prohibits any payment to the holders of the Notes until Senior Indebtedness has been paid in full. Actually, § 365(e)(1) applies to clauses conditioned on “(A) the insolvency or financial condition of the debtor at any time before the closing of the case; (B) the commencement of a case under [the Bankruptcy Code]; or (C) the appointment of or taking possession by a trustee in a case under [the Bankruptcy Code] or a custodian before such commencement.” 11 U.
Appellees are the liquidating trust created by the Plan and the trustees under the indenture agreement that is the focus of Spieker's objections.
The district court had jurisdiction over Spieker's appeal pursuant to 28 U.
Sections 12.1-12.12 of the Indenture are its subordination provisions. Like section 12.2, section 12.3 further provides that if any payments are made on the Notes before the Senior Indebtedness is paid in full, those payments must be turned over to the Senior Indebtedness until the Senior Indebtedness is paid in full. That is, the Plan provides for the payment of double dividends to Senior Indebtedness-it gets its own share plus the share to which the holders of the Notes would otherwise be entitled. That provision prohibits the termination or modification of an executory contract, or any right or obligation thereunder, solely on the basis of a provision of the contract that is conditioned on insolvency of the debtor. Standard of Review The district court's decision on an appeal from a bankruptcy court is reviewed de novo. County of Los Angeles (In re Gruntz), 202 F.3d 1074, 1084 n. This court therefore applies the same standard of review applied by the district court. Chang (In re Chang), 163 F.3d 1138, 1140 (9th Cir.1998). Discussion Section 365 of the Bankruptcy Code deals generally with executory contracts and unexpired leases. What section 12.3 does require is that SPFC pay directly to the holders of Senior Indebtedness any payments to which the holders of the Notes would otherwise be entitled. It further provides that, notwithstanding the provisions of section 12.3, in the event that payments are made to the holders of the Notes, such payment shall be “held in trust” for the benefit of the holders of the Senior Indebtedness.
His practice concentrates on corporate and financial restructuring, business solutions, bankruptcy litigation, secured transactions, corporate governance, mergers and acquisitions, and debtors’ and creditors’ rights. Bernard represents debtors, creditors, buyers, financial institutions, contract counterparties, trustees and official and ad hoc committees in large-asset bankruptcies, out-of-court workouts and adversary proceedings. Bernard’s experience spans numerous industries, including energy, mining, aviation, retail, manufacturing, telecommunications, financial services, heavy industry, real estate and hospitality. D., , from the University of Miami School of Law and his B. in economics from Columbia College, Columbia University.
He also serves as president (2018) and board member of the New York Chapter of the Turnaround Management Association (TMA). Bernard is admitted to practice in New York; Connecticut; Florida; and before the U. District Courts for the Eastern District of Michigan; Southern, Eastern, and Northern Districts of New York; Southern, Middle and Northern Districts of Florida; District of Connecticut and the U. Court of Appeals for the Sixth and Eleventh Circuits.
He has been recognized in a number of publications for the quality of his bankruptcy practice including: Best Lawyers in America; Leading Florida Attorneys; Super Lawyers and Euromoney Guide to the Leading US Insolvency Lawyers.