Lauren Moskowitz Speaks at ABI’s Insolvency 2020

On July 17, 2020, Cravath’s Financial Restructuring & Reorganization team submitted an amicus brief, working on a pro bono basis on behalf of Veterans Education Success (“VES”), in support of Plaintiff‑Appellee Kevin J. Rosenberg, a veteran who sought to discharge his student loan debts as part of his Chapter 7 proceeding. Student loan debt obligations are notoriously difficult to discharge even in bankruptcy, and Mr. Rosenberg’s success in the bankruptcy court was a rare victory for student loan debtors.

On July 20, 2020, Lakeland Tours, LLC, d/b/a WorldStrides (“WorldStrides”) filed a voluntary petition under chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the Southern District of New York. On July 8, 2020, WorldStrides signed a Restructuring Support Agreement (“RSA”) with (i) holders of 85% of its term and revolving loans, (ii) its private equity sponsors, Eurazeo North America, as manager of funds affiliated with Eurazeo SE (“Eurazeo”) and Primavera Capital Management Ltd. (“Primavera” and together with Eurazeo, the “Sponsors”) and (iii) its consenting hedge provider. The RSA contemplates a “pre‑packaged” plan that would significantly deleverage the company. The transaction involves a $368 million debtor‑in‑possession (“DIP”) financing facility, of which $216 million consists of new money loans provided equally by the consenting lenders, on the one hand, and the Sponsors, on the other hand. At exit, the Sponsors will receive their pro rata share of 100% of the new common stock issued by the reorganized debtors.

On April 7, 2020, Quorum Health Corporation (“Quorum Health”) filed a voluntary petition under chapter 11 of the Bankruptcy Code in the Bankruptcy Court for the District of Delaware. In conjunction with this petition, Quorum Health signed a Restructuring Support Agreement (“RSA”) with a majority of its term and revolving loan lenders and noteholders on a “pre‑packaged” plan to recapitalize the business and significantly reduce the company’s debt. The company also received a commitment of debtor‑in‑possession financing of $100 million, which was approved by Judge Karen Owens on April 9, 2020.

On May 5, 2020, Justice Andrea Masley of the New York State Supreme Court’s Commercial Division dismissed claims against Cravath client Goldman Sachs, which was sued in January 2019 by its former client, United Natural Foods, Inc. (“UNFI”), the largest publicly traded distributor of natural, organic, specialty conventional grocery and non‑food products in the U.S. and Canada and a major supplier to Whole Foods. In its complaint, UNFI brought claims alleging breach of contract and fraud relating to Goldman’s handling of the syndication of a term loan that UNFI used to finance its $3 billion acquisition of SuperValu Inc., which was announced in July 2018 and closed in October 2018. UNFI sought to recover damages in excess of $230 million, representing recoupment of fees paid and other costs of syndication, as well as incremental interest costs it expects to pay over the life of the loan.