ASM PCCTC Committee Meeting to Focus on Trading Distressed, Defaulted Debt

The Public Companies and Claims Trading Committee will present a panel discussion on whether the trading of distressed and defaulted debt is governed by federal or state securities laws at the 2003 Annual Spring Meeting, April 10-13, in Washington, D.C. The meeting will be held on April 12 at 9:30 a.m. in the Roosevelt Room of The Grand Hyatt. Featured panelists include Hon. Robert Drain, U.S. Bankruptcy Judge for the Southern District of New York and author of "Are Bankruptcy Claims Subject to the Federal Securities Laws?" (10 ABI Law Review 569 (2002)), and Barbara Sherman, special counsel to the Loan Syndication and Trading Association. Questions about this program or any committee activities can be directed to its co-chairs, Glenn E. Siegel (Dechert; New York ) or Geoffrey Groshong (Miller Nash LLP; Seattle).

Register today for the Annual Spring Meeting and save $50 off the late registration fee. Additional information about the conference is available online.

Qwest Noteholders Fail to Stop Coercive Exchange Offer
Written by Glenn E. Siegel

On Nov. 20, 2002, in the wake of serious cash flow problems and accounting irregularities, Qwest Communications International Inc. (QCII) announced a private exchange offer to holders of $12.9 billion of Qwest Capital Funding (QCF) Notes. The offer was to exchange QCF Notes for new notes with a lesser face value (but higher interest rate) of up to $4 billion, but with a junior security interest on the assets of Qwest Services Corporation (QSC). The offer had no minimum tender requirement but did make provision, in the event the exchange offer was over subscribed, for a QCII security that would be structurally senior to the QCF Notes but junior to the QSC Notes. It was due to expire on Dec. 20, 2002.
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Preliminary Injunction as to Equity and Claims Trading in UAL Corp. Chapter 11
Written by Geoffrey Groshong

On Feb. 24, 2003, U.S. Bankruptcy Judge Eugene Wedoff (N. D. Ill.), in an adversary proceeding in the jointly administered UAL Corporation cases, entered a preliminary injunction limiting the transfer of equity interests in and claims against the debtors (preliminary injunction”). The debtors in possession (debtors) asserted that absent the injunction, by reason of §382 of the Internal Revenue Code, they would lose the ability to carry forward and offset against their future taxable income net operating losses (NOLs) with a face value of approximately $4 billion. The debtors further argued that, based on the current 35 percent corporate income tax, the NOLs were currently worth approximately $1.4 billion in possible future tax savings over a 20-year period, and would be a significant aid in the debtors’ reorganization efforts.
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