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Bankruptcy & Restructuring

The Brattle Group combines industry expertise with financial, economic, and statistical analyses to advise debtors, creditors, courts, trustees, and governments on major restructuring, liquidation, and litigation matters.

Brattle’s analyses have been relied upon for determinations of plan confirmation, fraudulent conveyance, substantive consolidation, equitable subordination, and monetary damages. Our bankruptcy practice is further strengthened by our subject matter expertise in private equity and hedge fund custom and practice, M&A litigation, and tax controversy.

Brattle’s consultants have long-established reputations as thought leaders in bankruptcy and restructuring. Our expertise reflects our role as testifying and consulting experts on many of the largest and most complex corporate restructurings in recent history. These include Caesars, Lehman Brothers, Nortel, Washington Mutual, Ambac, Refco, and Enron.

 

Our Areas of Focus Include:

  • Business and Securities Valuation
  • Credit and Solvency Analysis
  • Forensic Accounting/Ponzi Schemes
  • Distressed M&A/Distressed Debt
  • Piercing the Corporate Veil
  • Debt/Equity Characterization
CASE HIGHLIGHT

Testimony of Brattle Principal Yvette Austin Smith Contributes to Win for United States Steel Corporation in Debt/Equity Classification of Intercompany Debt

CASE HIGHLIGHT
Brattle advises Apollo Global Management and submits expert declaration on valuation and solvency in connection with CEOC plan confirmation.

Engagements
REPRESENTATIVE ENGAGEMENTS

Below is a list of representative engagements for our Bankruptcy & Restructuring practice.

Sears Holding Corporation

In the Sears Chapter 11 proceedings, Brattle was retained to analyze the diminution in value of collateral involving positions held by certain holders of Sears second lien debt. Issues included complex collateral valuation, adequate protection, asset-based lending arrangements, and credit bids.

Caesars Entertainment Operating Company

Apollo Global Management retained Brattle to provide retrospective valuation and solvency analyses to address claims arising from avoidance actions and alleged fraud in CEOC’s bankruptcy. The analysis encompassed approximately 15 related-party transactions that occurred between 2008 and 2014, prior to CEOC filing for bankruptcy in January 2015. The transactions involved the sale of gaming and lodging properties, intellectual property, and other related assets. We also valued contributions to CEOC’s restructuring plan. The case settled on terms favorable to our client.

U.S. Steel Canada

In connection with a proposed plan of arrangement, Brattle conducted a financial and economic analysis of whether approximately $2 billion loaned by United States Steel Corporation (our client), to U.S. Steel Canada (a wholly-owned subsidiary), should be recharacterized as equity. Subsequent to the loan transactions, the Ontario Superior Court of Justice granted protection to the subsidiary under the Companies’ Creditors Arrangement Act. In a post-trial decision, the court ruled in favor of our client, retaining the priority of the full $2 billion debt claim.

Fletcher International

A Brattle principal served as special consultant to the bankruptcy trustee of Fletcher International, the master fund in a master-feeder fund structure managed by Alphonse “Buddy” Fletcher. Issues included custom and practice with respect to investment fund management, valuation of complex esoteric investments, investment fees, solvency, red flags, and Ponzi schemes. Issues also encompassed industry custom and practice with respect to fund managers and third-party service providers related to the business of Fletcher Asset Management, a registered investment adviser, and Richcourt, a fund of funds. The Brattle team researched and evaluated causes of action on behalf of the estate in support of the trustee and counsel. We also evaluated causes of action including those against law firms, accountants, administrators, and company principals.

GSC Group

A Brattle principal was retained as an expert in the bankruptcy of GSC, a credit-oriented investment management firm, on behalf of Black Diamond Capital Management Group. The case issues were related to market fee rates for a variety of structured credit and private equity investment products, 363 asset sales, valuation of management contracts, and whether new investments made by Black Diamond were made on arms-length terms and at market prices. Our principal issued an expert report, provided deposition testimony, and testified at trial in Bankruptcy Court for the Southern District of New York.

The Dolan Company

A Brattle principal served as financial advisor and testifying valuation expert for the Official Committee of Equity Security Holders of The Dolan Company in a valuation dispute in a contested bankruptcy. We issued a valuation report on component Dolan businesses, evaluated plan alternatives, and testified as the designation valuation expert. The equity security holders received a recovery in a negotiated settlement.

Lehman Brothers

A Brattle principal was retained as a testifying expert on the liquidity and solvency of Lehman’s U.S. and U.K. broker-dealer entities. We analyzed whether a certain series of transactions hastened the insolvency of Lehman Brothers Holdings, Inc., and valued collateral securing short-term loans for the purpose of determining the ability to repay in a manner consistent with contractual terms and standard industry practice.

Nortel Networks

Counsel for a group of U.K. pension claimants retained Brattle to opine on allocation and claims issues in Nortel’s bankruptcy proceedings. Brattle supported two testifying experts on analysis related to international transfer pricing and proceeds allocation. In the allocation trial, occurring simultaneously before both the Delaware Court of Bankruptcy in the U.S. and the Superior Court of Toronto in Canada, a Brattle principal recommended a pro rata allocation of Nortel’s liquidation proceeds. The two courts adopted a modified pro rata allocation mechanism.

SemGroup

A Brattle principal was retained by SemGroup’s bankruptcy trustee as a damages expert in litigation brought against the firm’s auditors. Brattle modeled the SemGroup founder’s speculative oil and gas derivatives trading business, and evaluated the damages caused by the audit firm’s alleged breach of fiduciary duty in failing to issue a qualified opinion on the SemGroup financial statements given its knowledge of the trading activity. The case settled on terms favorable to our client.

Ambac

In Ambac’s bankruptcy proceeding, Brattle assisted Ambac in its tax dispute with the IRS regarding the taxpayer’s $700 million tax refund during the recent financial crisis. The dispute involved the appropriate taxation of credit derivatives, currently an unsettled area in tax policies and regulation. The case settled in our client’s favor.

Parmalat

Brattle was retained by counsel for Bank of America regarding several financing transactions that it had arranged for Parmalat’s Latin American subsidiaries. Brattle testifying experts explained the commercial and tax purposes for features of syndicated loans and initial public offerings in emerging markets, analyzed their impact on Parmalat’s overall indebtedness, estimated a key Brazilian obligator’s enterprise value, and rebutted the deepening insolvency theory of damages.

Global Crossing

On behalf of the board of directors for Global Crossing, Brattle reviewed the business purposes of the company’s fiber optic capacity lease transactions, conducted forensic analysis of the associated accounting records, and reviewed a Securities and Exchange Commission (SEC) disclosure regarding Global Crossing’s pro forma accounting. Our team also examined the market reaction to the company’s various disclosures.

Experts
Publications
Article
Assessing the Reasonableness of Rights Offerings Raising Exit Financing in the Context of a Chapter 11 Bankruptcy Proceeding
May 7, 2019
Published in Corporate LiveWire's Bankruptcy & Restructuring 2019: Expert Guide
Brochure
Expertise in Coal Bankruptcy
February 2016
Published by The Brattle Group, Inc.
Article
The Implications of Transfer Pricing in Bankruptcy
May 29, 2015
Bin Zhou and Steven D. Felgran
Published in Bloomberg BNA
Article
Asset Value Trumps Discounted Cash Flow in Another Bankruptcy Valuation Dispute
July 29, 2014
Published by The Brattle Group, Inc.
Article
Solvency Analysis in the Context of Fraudulent Transfer after Eleventh Circuit’s TOUSA Reversal
June 2012
Published in the American Bankruptcy Institute’s Business Reorganization Committee Newsletter
News & Knowledge
May 07, 2019
Brattle Principal Marti Murray Authors Article on the Role of Rights Offerings in Corporate Restructurings

Brattle Principal Marti Murray authored an article in Corporate LiveWire’s Bankruptcy & Restructuring 2019: Expert Guide publication, titled “Assessing the Reasonableness of Rights Offerings Raising Exit Financing in the Context of a Chapter 11 Bankruptcy Proceeding.”

December 07, 2017
David McKnight to Participate in The Knowledge Group Webinar on Corporate Restructuring and Bankruptcy

Brattle Senior Associate David McKnight will present during The Knowledge Group’s webinar, “Corporate Restructuring and Bankruptcy: Trends, Developments, and Opportunities for the Year Ahead,” taking place December 7, 2017 from 3-5 pm EST.