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Driller Denied Ch. 11 Shield Against Warrant Lawsuit; Multi-Color Judge Designates Himself As Mediator
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Welcome to WSJ Pro Bankruptcy's Daily Briefing. It's Thursday, April 3. In today's briefing, the reorganized Unit Corp failed to shake off class-action litigation stemming from its bankruptcy exit. Elsewhere in court, the judge overseeing Multi-Color's case is moonlighting as its mediator.
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Eli Hartman/Reuters
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Driller is denied chapter 11 shield in stock warrant lawsuit. A federal judge ruled that oil-and-gas driller Unit Corp. must face former shareholders’ claims that it improperly altered the terms of their stock warrants on its way out of chapter 11.
Judge George Hanks of the U.S. District Court in Houston said Tuesday that while Unit’s chapter 11 plan contained a broad shield against lawsuits, it didn’t bar claims that arose after it took effect.
The then-bankrupt Unit agreed in 2020 to grant stock warrants to equity investors and employees who held stock in their 401(k) retirement accounts in return for their support for the company’s chapter 11 restructuring, court records show. The company modified the agreement just as it exited bankruptcy in September 2020, removing a key protection for holders against dilution.
The subtle modification wasn’t made public until later and went unnoticed for years among warrant holders, WSJ Pro Bankruptcy previously reported.
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Judge appoints himself as mediator for Multi-Color. Bankruptcy Judge Michael Kaplan in New Jersey has taken what experts call an unusual step: appointing himself to oversee mediation in label maker Multi-Color’s contentious chapter 11 case.
On Tuesday, lawyers for Multi-Color, its owner Clayton Dubilier & Rice and three creditor groups agreed to an order appointing Judge Kaplan as mediator for disputes “including but not limited to” disagreements over the company’s restructuring plan and disclosure statement.
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Bankruptcy scholars and restructuring attorneys said the move is unusual, as courts typically appoint an independent mediator to oversee private negotiations before any agreements are brought to the presiding judge.
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OPI inks deal with noteholders for chapter 11 exit. Office Properties Income Trust has finalized a settlement agreement with its 2027 noteholders, resolving a major hurdle in achieving a consensual chapter 11 plan.
According to the settlement termsheet filed with the U.S. Bankruptcy Court in Houston on Tuesday, the 2027 noteholders, who had claimed to be owed as much as $445 million in senior secured notes due March 2027, will receive $60 million by February 2027, along with a new secured promissory note of $335 million bearing 8.375% interest and maturing 2029. The settlement also requires the promissory note’s collateral to maintain a minimum appraised value of $480 million.
The settlement will resolve a lawsuit filed in November by OPI against the 2027 noteholders, seeking to disallow $76.4 million of the discount the creditors received as part of a debt exchange in 2024. --- Akiko Matsuda
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McDermott taps Galardi in private-equity distress push. McDermott Will & Schulte named restructuring veteran Gregg Galardi to co-lead its restructuring practice alongside Darren Azman, the firm said Wednesday.
Galardi joins from Ropes & Gray with experience advising companies on restructurings and liability management transactions. His hire marks McDermott’s increased focus on private equity sponsors and other private-market participants. Debtors are increasingly turning to out-of-court restructurings and liability management exercises to manage liquidity pressures in volatile credit markets.
McDermott’s restructuring practice group includes more than 75 lawyers across the U.S. and Europe. Felicia Perlman, who co-led the team, will continue advising clients. --- Jodi Xu Klein
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