Bankruptcy, Restructuring & Creditors' Rights

Sutherland has decades of experience representing debtors and creditors in bankruptcy and restructuring matters.

Sutherland represents creditors and debtors in an extensive range of bankruptcy and insolvency proceedings, and out-of-court workouts.

Understanding the complexities of financial distress and potential solutions is only one part of the equation; each industry has unique commercial features that affect workouts. One of the keys to Sutherland’s success is industry-specific knowledge. Because we are familiar with these subjective characteristics, we’ve been able to play major roles in national Chapter 11 reorganizations involving energy, entertainment, wireless telecom, mortgage lending and retail companies.

Sutherland takes a team approach in addressing the rights of various parties in bankruptcy proceedings or restructuring transactions. We have established strong professional and personal relationships with the other major law firms practicing in the field and the financial and commercial advisers who participate in workouts. Knowing these participants allows Sutherland to address all aspects of a situation quickly and effectively. Our reputation as formidable litigators is well-known and often helps avoid the expense of confrontational proceedings.

Why Sutherland
Creditor and debtor experience. Sutherland's lawyers represent both creditors and debtors in virtually all types of bankruptcy situations. This gives us insight into the way other parties in a bankruptcy are likely to act and what they hope to achieve. This strategic advantage strengthens our clients' positions whether they are creditors or debtors.

Industry knowledge. Our bankruptcy practice plays to our business strengths by focusing on those fields where we have a great deal of industry knowledge and experience. It is not enough to understand the complexities of finance; our lawyers also know the business context of the specific industries in which our clients operate: automotive, energy, entertainment, finance, wireless telecom, timber, construction, mortgage lending and retail.

Workout spectrum expertise. Our lawyers are familiar with all of the various methods of resolving insolvencies. They are adept at state insolvency proceedings and federal bankruptcies, experienced at consensual restructurings and UCC liquidations and foreclosures. They have succeeded in aiding clients with these resolution methods both domestically and internationally.

Litigation ability. Sutherland has decades of experience in the litigation that often arises between creditors and debtors, including fraudulent transfer, lien priority, preference and Chapter 11 litigation. Of most recent note is our pro bono client’s 2013 victory in the Supreme Court of the United States in Bullock v. BankChampaign, N.A., which was argued before the Court by our partner Thomas M. Byrne. The court agreed with our client’s interpretation of the term “defalcation” found among the exceptions to bankruptcy discharge. In ruling for our client, the Court rejected the holdings of all of the lower courts and the contrary arguments of, among others, the U. S. Solicitor General. One of the most important cases in our firm's history was the 1934 equity receivership of Hoosac Mills in the Massachusetts District Court and in which we prevailed before the Supreme Court in 1936. From the 1930s through the biggest and most complicated Chapter 11 cases today, our bankruptcy attorneys are adept at meeting clients’ objectives in complex litigation in courts at all levels.

Nuts and Bolts
In addition to representing clients in the specific matters outlined above, we have experience in:

  • REO assets
    • Representing lenders and purchasers in the purchase and sale of loans and REO assets acquired by note sales, foreclosures or deeds in lieu of foreclosure
  • Tenant bankruptcy
    • Representing landlords in connection with tenant bankruptcy cases and related co-tenancy issues
  • Enforcement actions
    • Representing lenders and borrowers in collection and guarantee enforcement actions involving the entire capital and credit stack, including troubled joint ventures and mezzanine loan defaults
  • Specialized transactions
    • Advising on specialized distressed asset transactions, such as hospitality and “fractured condo” deals, and strategic divestitures of underperforming assets
  • Securitized debt
    • Representing master servicers, special servicers and providers of debt, mezzanine and equity capital with respect to performing and non-performing securitized loans, CDOs and CLOs
  • Workouts
    • Negotiating out-of-court consensual restructurings of debt
  • Dispute resolution
    • Litigating, arbitrating and/or mediating a variety of complex disputes, from real estate disputes to settlement values of interest rate swaps
  • Cross-border insolvencies
    • Our attorneys have been actively involved in numerous Chapter 15 cases under the Bankruptcy Code, and are comfortable coordinating with local counsel in various foreign countries to achieve results in cross-border insolvency proceedings.
  • Asset acquisitions
    • Counseling clients in asset acquisitions through section 363 sales and/or the plan of reorganization process, including the analysis of strategic bid alternatives
  • DIP lenders
    • Assisting lenders in protecting—and sometimes improving—their rights through the extension of DIP financing arrangements
  • Post-petition transactions with the estate
    • Our lawyers can enter into major transactions, such as structured finance deals and first-lien hedging programs, with debtors reorganizing under Chapter 11.
  • Enforcement of setoff/ recoupment rights
    • The ability to exercise contractual setoff or recoupment rights is a significant concern to many clients. We can maximize creditors’ ability to offset amounts owed, notwithstanding an increasingly challenging response in the courts
  • Valuation of trading contracts
    • Many of our clients enter into trading contracts to hedge their exposure and for other commercial purposes. In the event of a counterparty bankruptcy, our team is experienced at guiding clients through each step of the process for terminating and valuing the settlement payments under such contracts.
  • Major executory contracts: assumption, assignment and termination
    • We advise clients who are counterparties on major contracts with the debtor, such as construction, supply, intellectual property and franchise agreements.

Take Action
Sutherland clients benefit from our knowledge of their industries—insight that extends beyond the complexities of finance and allows us to more effectively address their commercial situation, whether as creditor or debtor.

Selected Experience
Argued and won Bullock v. BankChampaign, N.A. (2013) in the U.S. Supreme Court, which established the meaning of the "defalcation" exception to a bankruptcy discharge.
In Bullock v. BankChampaign, N.A., the U.S. Supreme Court agreed with our client’s interpretation of the term “defalcation” found among the exceptions to bankruptcy discharge. In ruling for our client, the Court rejected the holdings of all of the lower courts and the contrary arguments of, among others, the U.S. Solicitor General.
Our client Randy Bullock had been the trustee of a life insurance trust established by his father. Initially, at the direction of his father, Randy made loans from the trust to his mother and to a business in which Randy had an interest, and he made similar loans later, all of which were repaid to the trust with interest. Other beneficiaries of the trust contended, however, that these loans constituted self-dealing. A state court in Illinois agreed, entering a judgment against Randy for breach of fiduciary duty for more than $250,000.
Years later, Randy sought to discharge this debt through a Chapter 7 bankruptcy filing in Alabama. But the bankruptcy judge ruled that no discharge was available because the self-dealing constituted “defalcation,” an exception to discharge under the Bankruptcy Code. The district court and the U.S. Court of Appeals for the Eleventh Circuit, noting a circuit split on the definition of defalcation, agreed and affirmed.
The case was brought to us by the Emory Law School Supreme Court Advocacy Program after the Eleventh Circuit’s decision. Working with Emory students, we prepared and filed a petition for certiorari, which the U.S. Supreme Court granted. The case became even more challenging when the Solicitor General of the United States weighed in to support BankChampaign, the successor trustee, arguing that the defalcation exception to discharge should apply. To that point, the Solicitor General had been on the winning side of 13 consecutive bankruptcy cases in the Supreme Court. Fourteen bankruptcy professors also filed a brief in support of the Bank’s position. The briefing featured case law and historical background going back to the 1830s. After oral argument, the Supreme Court ultimately ruled 9-0 in our client’s favor, holding that the undefined term “defalcation” in the Bankruptcy Code, like the terms “larceny” and “embezzlement,” which appear close beside it, includes a culpable state of mind requirement. The Court remanded for further proceedings, and the case was resolved on remand with Randy obtaining his discharge.

Sutherland represents South Mississippi Electric Power Association in power plant acquisition complicated by a bankruptcy.
We supported this generation and transmission cooperative in an acquisition of a power plant. This plant was an asset held by an entity in bankruptcy which complicated what would have been a straightforward purchase under other circumstances.

Sutherland represents one of the nation’s largest manufacturers in all bankruptcy cases involving its nationwide dealer network.
We represent one of the nation’s largest manufacturers in bankruptcies involving its network of more than 3000 dealers, which present, at minimum, issues concerning executory contract assumption and assignment, contract termination, bankruptcy sales, plan confirmation and avoiding power litigation. Understanding the intersection of bankruptcy law and state regulation of distribution practices is critical.

Several energy trading creditors in the SemGroup bankruptcy represented by Sutherland.
We represented several energy trading clients in counterparty suits and trading disputes resulting from the SemGroup bankruptcy. SemGroup is estimated to have lost $2.4 billion trading oil futures. Our long-standing experience in energy bankruptcies serves clients well in managing disputes of this magnitude.

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§  “Diversity at Sutherland Asbill & Brennan LLP” to “Diversity at Eversheds Sutherland (US) LLP”

§  “Diversity” section:

o   The firm’s emphasis on diversity is reflected in numerous ways throughout the firm, such as the manner in which we recruit lawyers and other employees, our work-life policies and our professional service efforts. We have been recognized for our achievements in diversity.  More importantly, we understand the significant role a diverse community plays in the firm's growth and development.

§  “Our Awards and Recognitions” section:

o   Eversheds Sutherland (US) LLP continues to be recognized for its efforts to promote diversity in the workplace and in the legal profession. In 2016 we were named a “Best Place to Work for LGBT Equality,” having earned a perfect 100 score on the Human Rights Campaign’s Corporate Equality Index, and we also were ranked a Top 100 Firm for Minority Attorneys by Law360. In addition, the firm was awarded the Gold Standard Certification for the fifth consecutive year by the Women in Law Empowerment Forum.

§  “Our Commitment” section:

o   Eversheds Sutherland (US) LLP is committed to promoting diversity within the firm and in the legal profession.  We believe that diverse skills, knowledge and viewpoints make us a stronger, more productive law firm.  We hire and promote qualified lawyers and other professionals regardless of race, color, national origin, religion, disability, gender, gender identity or sexual orientation.  We understand that diversity enhances our value to clients by allowing us to staff our client teams with professionals who possess broad experiences and a spectrum of perspectives.

o   Eversheds Sutherland (US) LLP has a cross-office Diversity Committee with responsibility for supporting and enhancing our firm culture.  Our committee has helped coordinate and lead a number of efforts to advance diversity within our firm and the community. Affinity groups at the firm serve as support networks for attorneys of color; women lawyers; and gay, lesbian, bisexual and transgender attorneys.

o   We are committed to working with our clients as they pursue the common goal of a professional workplace where opportunity is available to all.

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