September 13, 2024
A Willkie team led by partner Mark Stancil was recognized as a “Runner Up” by The AmLaw Litigation Daily for securing a precedent-setting $260 million victory in the US Court of Appeals for the Third Circuit on behalf of bondholders in the Hertz bankruptcy case.
The Third Circuit’s opinion dictates that bondholders were improperly denied $260 million in combined interest and make-whole payments, which amounts have been accruing interest for the three-plus years the litigation has taken to resolve. The Third Circuit panel majority concluded that a Delaware bankruptcy court was wrong to hold that Hertz could refuse to pay bondholders their full contract rate of interest (between 5.50% and 7.125% depending on the bond) during the case, which totaled approximately $125 million for the duration of the case. The Court also held that Hertz owed approximately $135 million in “make-whole” payments to certain bondholders. The final total will exceed $300 million.
The precedential opinion also adds to a growing area of focus in bankruptcy law related to solvent debtors, post-bankruptcy interest, and make-whole payments. The opinion by Senior Judge Thomas Ambro agrees with the results reached by the Fifth and Ninth Circuits in the Ultra Petroleum and PG&E cases, and further expands on the “absolute priority” principle compelling this result.
Read more about the case here.
Mark Stancil, Co-Chair of Willkie’s Strategic Motions & Appeals Practice and Co-Chair of the Bankruptcy Litigation practice, served as lead counsel in the representation of Hertz’s bondholders on this issue, with a Willkie team that also included partners Donald Burke and John Brennan, and associate John Goerlich. The case was argued in October 2023.
The Third Circuit’s opinion dictates that bondholders were improperly denied $260 million in combined interest and make-whole payments, which amounts have been accruing interest for the three-plus years the litigation has taken to resolve. The Third Circuit panel majority concluded that a Delaware bankruptcy court was wrong to hold that Hertz could refuse to pay bondholders their full contract rate of interest (between 5.50% and 7.125% depending on the bond) during the case, which totaled approximately $125 million for the duration of the case. The Court also held that Hertz owed approximately $135 million in “make-whole” payments to certain bondholders. The final total will exceed $300 million.
The precedential opinion also adds to a growing area of focus in bankruptcy law related to solvent debtors, post-bankruptcy interest, and make-whole payments. The opinion by Senior Judge Thomas Ambro agrees with the results reached by the Fifth and Ninth Circuits in the Ultra Petroleum and PG&E cases, and further expands on the “absolute priority” principle compelling this result.
Read more about the case here.
Mark Stancil, Co-Chair of Willkie’s Strategic Motions & Appeals Practice and Co-Chair of the Bankruptcy Litigation practice, served as lead counsel in the representation of Hertz’s bondholders on this issue, with a Willkie team that also included partners Donald Burke and John Brennan, and associate John Goerlich. The case was argued in October 2023.
