Fallout From Liability Management Exercise: Double Dip and Pari Plus Fights In and Out of Bankruptcy

Reorg and Schulte Roth & Zabel hosted a discussion on potential state law and bankruptcy challenges to “double-dip” and “pari plus” financing transactions, including fraudulent transfer, substantive consolidation/alter ego, recharacterization, and equitable subordination issues. During the event, possible litigation by nonparticipating creditors and creditors’ committees was considered to eliminate the benefits of these structures for participating creditors and the implications for plan treatment and value allocation.