Digital scheme pays Venezuela health workers from frozen funds

WINNER: Milbank

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The firm implemented a novel financing structure that enabled carriers American Airlines, United Airlines, Delta Air Lines, Air Canada and Spirit Airlines to raise capital during the coronavirus pandemic. Milbank acted as legal counsel to lead underwriters in these transactions.

The airlines used their frequent flyer loyalty programmes as investment assets, turning them into separate subsidiaries. The financings last year — $6.8bn for United, $10bn for American, and $9bn for Delta — were among the largest in the industry’s history. Their structure provides a model for other loyalty programme financings for airlines globally.

Akin Gump Strauss Hauer & Feld
In collaboration with the National Independent Venue Association (NIVA), which represents more than 3,000 music clubs and performing arts venues in the US, the firm ran the Save Our Stages campaign, which lobbied the federal government for Covid relief funding for venues. The firm secured bipartisan support by focusing on economic arguments. The Save Our Stages Act was signed into law in December 2020, securing $16bn in emergency funds — equivalent to nearly half of the venues’ revenues in 2019.

The firm secured an order from the federal energy regulator to secure $800,000 owed by Gulfport Energy Corporation to its client, the Rockies Express Pipeline, before Gulfport filed for bankruptcy. This order stated that Gulfport was not allowed to cancel contracts unless it was in the public interest. The firm had to secure this declaration before the bankruptcy was filed because automatic stay, which halts certain actions against the distressed party in a bankruptcy, would have prevented the regulator from acting.

Hogan Lovells
The firm advised the republic of Ecuador on the restructuring of $17.4bn of the country’s external debt. The firm used a collective action clause, which is uncommon for a restructuring of this size. To persuade a large and disparate group of international investors to accept the terms, the clause allows a supermajority of bondholders to enforce a legally binding restructuring on all holders, including those that vote against it. The firm has since been approached by the city of Córdoba in Argentina to restructure $150m of debt using the same approach.

Kirkland & Ellis
The firm represented US department store chain JCPenney in its bankruptcy proceedings. The company was split into an operating company, which manages the business, and a property company — a holding company that owns the property. Under this arrangement, the operating company leases the real estate from the property company. The firm brought in an external consortium led by real estate investors Simon Property Group and Brookfield Property Partners, which owns malls that house JCPenney stores, to buy the operating company. The restructuring preserved 60,000 jobs at JCPenney, two-thirds of the workforce. Commended: Josh Sussburg

A woman walks by a JC Penney store
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Representing the first lien holders in the JCPenney bankruptcy proceedings, the firm worked with creditors to identify attractive assets for the department store chain’s property company. The retailer had acquired hundreds of properties over many decades, held in different legal entities, which the law firm organised into the property company — a single legal entity leased to Simon Property Group and Brookfield Property Partners, owners of the operating company. The opco-propco structure could be replicated for other distressed retailers.

Morrison & Foerster
The firm structured the California Rebuilding Fund to help small businesses in the US state weather the Covid-19 pandemic. The fund acquires capital from private, philanthropic and public sector resources, and provides loans to businesses. It does this through community development financial institutions, such as development banks, which underwrite the loans. The fund has raised more than $100m to date and has received applications from more than 3,000 businesses.

Sullivan & Cromwell
The Venezuelan opposition, led by Juan Guaidó, wanted to use assets frozen under international sanctions against the Nicolás Maduro government to provide financial support for the country’s healthcare workers during the Covid-19 crisis. The law firm designed the legal framework and secured licences, allowing frozen assets held by the US to be released. Funds were transferred to healthcare workers’ mobile phones using blockchain platform Circle, to be spent as cash via Airtm, a digital payments platform.

Weil, Gotshal & Manges
AMC, one of the world’s largest cinema chains, capitalised on the boom in retail share trading in June by relying on at-the-market equity offerings to avoid an in-court restructuring. At-the-market offerings are a way for companies to raise money by incrementally selling newly issued shares, or shares they already own, on the secondary trading market — normally a risky way for a company facing bankruptcy to raise capital. The firm worked with the US Securities and Exchange Commission to gain regulatory approval for the plan and negotiated significant concessions from the cinema chain’s landlords.

White & Case

People rent cars at a Hertz car rental counter in the Miami International Airport on October 25, 2021
© Getty Images

The firm advised car rental company Hertz on its restructuring of $19bn of debt. Securitisation was the principal source of exit financing from the bankruptcy — a first for a transaction of this size. Securitisation and an exit from bankruptcy are traditionally difficult to execute simultaneously.

The structure helped Hertz avoid funding costs, and equity investors and debt holders have both been paid in full. The company has since relisted on Nasdaq.

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