Gerchen Keller purchases a portion of the interest in proceeds of $213 million fraudulent conveyance judgment in innovative public sale. An interesting transaction took place on September 8, 2016. The chapter 7 bankruptcy trustee for Magnesium Corporation of America (“MagCorp”) sold a $50 million share of a $213 million judgment it has against fraudulent conveyance transferee, Renco Group Inc. and former MagCorp owner, Ira Rennert. The buyer, Gerchen Keller Capital LLC paid $26.2 million transaction for the interest. Those close to the deal report that this may be the first […]

JPMorgan Chase & Co. and others (“JPM”) lent $1.5 billion to General Motors Corporation (“Old GM”) under a term loan agreement (the “Term Loan Agreement”).  JPM was the senior secured creditor of Old GM.  Old Gm went into chapter 11 bankruptcy.  Under the terms of the DIP financing approved by the bankruptcy court, proceeds of the DIP loan were used to pay $1.5 billion to JPM for its claims under the Term Loan Agreement.  The unsecured creditors committee formed in the Old GM chapter 11 case (the “Committee”) wants that […]

In our last article[i], we discussed the judicial recharacterization of loans as equity interests.  As we described, a court will recharacterize a lender’s debt claim as equity if it determines the “loan” actually was intended to be, and was treated by the parties as, an equity investment.  Recharacterization is a powerful tool for creditors and trustees because, under the Bankruptcy Code’s priority scheme, debt claims (and all general unsecured claims) must be repaid in full before equityholders can receive any distribution on account of their (equity) interests.  Because many, if […]