Special counsel Benjamin D. Feder
was quoted in the Turnarounds & Workouts
article “Southeastern Grocers Addresses ‘Hot-Button Issue.’” The article discusses the prepackaged bankruptcy of Southeastern Grocers and Judge Mary Walrath’s decision to reject a challenge to payment of the fees and expenses of an indenture trustee for a class of impaired unsecured bonds. Southeastern Grocers operates a number of supermarket chains in the Southern U.S., including Winn-Dixie, Bi Lo, and Harvey’s.
As part of its plan of reorganization, Southeastern Grocers agreed to pay in cash the fees and expenses of the unsecured bonds’ indenture trustee, but the U.S. Trustee argued that separate payment of the indenture trustee’s fees and expenses in cash, as part of company’s settlement with the unsecured bondholders, violated the Bankruptcy Code. Judge Mary Walrath ultimately rejected the U.S. Trustee’s argument.
“This has been a hot-button issue because payment of fees and expenses is a key element for getting deals done in Chapter 11 cases,” Ben said. “It was made in a major case in a key district by one of the most respected bankruptcy judges in the country … we have a transcript of the hearing, and we intend to cite it as persuasive authority in other cases as this issue arises. We think that Judge Walrath’s position will carry weight, certainly with the other judges in Delaware, and likely in other districts around the country.”