Table Of Content

DEBT FINANCING AND RESTRUCTURING THEORY AND PRACTICE Spring 1996 Volume I Peter E. Murphy These materials are solely for the use of students enrolled in this course at the Faculty of Law, University of Toronto. AM* BORA LASK1S LAW LIBRARY JAN 15 1996 FAbbLTY OF LAW limVEHSITY OF T0S8NT0 BORA LASKIN LAW LIBRARY UNIVERSITY OF TORONTO , TABLE OF CONTENTS Page L INTRODUCTION TO CAPITAL STRUCTURE G. Triantis, Secured Debt under Conditions of Imperfect Information, 21T. Legal Studies 225-258 (1992). 1 Jensen, Eclipse of the Public Corporation, 67 Harv. Bus. Rev. 61-74 (Sept. - Oct. 1989). 19 IL SHORT. MEDIUM AND LONG-TERM DEBT FINANCING J.C. Van Horne, C.R. Dipchand and J.R. Hanrakan Financial Management and Policy (Canadian 5th ed.) Pages 512-39, 554-59, 635-43, 647-64. 33 Refer to Volume II Precedent Materials (selected excerpts from sample loan agreement, trust deed, convertible and subordinated debenture. Bank commitment letter, s. 427 Bank Act Security, Letters of Credit, Bankers Acceptances and Money Market Instruments) m. COMPLEX AND HYBRID DEBT INSTRUMENTS: PRINCIPLES OF FINANCIAL ENGINEERING Finnerty, An Overview of Corporate Securities Innovation, 4 T. App. Corp. Fin. 23 (1992). 64 Smithson and Chew, The Uses of Hybrid Debt in Managing Corporate Risk, 4 T. App. Corp. Fin. 79 (1992). Smithson, "A LEGO Approach to Financial Engineering: An Introduction to Forwards, Futures, Swaps and Options," 4 Midland Corp. Fin. T. 16 (1987). 92 Refer to Volume II Precedent Materials relating to interest rate swaps and derivative products IV. FINANCIAL AGENCY PROBLEMS AND THE VOICE OF DEBTHOLDERS IN CORPORATE GOVERNANCE Easterbrook and Fischel, The Economic Structure of Corporate Law 63-72 (1991). 105 Smith and Warner, On Financial Contracting: An Analysis of Bond Covenants. 7 1. Fin. Econ. 117-146 (1979). 109 -11 - Page McDaniel, "Bondholders and Corporate Governance", 41 Bus. Lawyer 424-31 (1986).139 Metropolitan Life Ins. Co. v. RTR Nabisco Inc. 716 F. Supp. 1504 (S.D.N.Y. 1989).147 Gever v. Ingersoll Publications Co. (Del. Ch., June 18,1992 unreported).167 Editor's note: Credit Lvonnaise Bank v. Pathe Communications (Del. Ch., Dec. 30, 1991 unreported).174 Refer to Volume II Precedent materials (excerpts from sample loan agreement, trust deed and security agreement setting out different patterns of covenants). V. LIMITS ON THE EXERCISE OF DEBTHOLDER GOVERNANCE OR CONTROL: LENDER LIABILITY Standard Investments Ltd, v. CIBC 52 O.R. (2d) 473 (Ont. C.A.).176 K.M.C. Co., Inc, v. Irving Trust Co., 757 F. 2d 752 (6th Cir. 1985). 196 Fischel, The Economics of Lender Liability, 99 Yale L.T. 131, 131-146 (1989).205 Bennco Liquidating Company v. Ameritrust Company National Association. 621 N.E. 2d 760 (Ohio App. 8 Dist 1993). 223 Davis, Graham & Stubbs, Legal Memorandum (May 7, 1992) Lender Liability -- The EPA Final Rule. Nation, Life Without EPA's Rule Interpreting CERCLA'S Secured Party Exemption, 1994 Banking Law Journal 499-506. 234 Jeffrey M.I. "Environmental Liability: A Continuing Source of 042 Concern for Lenders"..... A.G. Ontario v. Tyre King Tyre Recycling Ltd, et. al. 9 O.R. (3d) 318 (1992)..■.273 PRIVATE RESPONSES TO FINANCIAL DISTRESS: PRINCIPLES AND PROBLEMS OF CONSENSUAL RESTRUCTURING Haugen and Senbet, 'The Insignificance of Bankruptcy Costs to the Theory of Optimal Capital Structure", 33 T. Finance 383 (1978) 279 - Ill - Page Haugen and Senbet, "Bankruptcy and Agency Costs: Their Significance in the Theory of Optimal Capital Structure" 23 T. Fin, and Ou. Analysis 27 (1988).286 Lickorish, Debt Rescheduling, Butterworths T. of Int. Banking and Financial Law, Jan. 1992 pp. 10-12; 13-14.298 Coffee and Klein, Bondholder Coercion: The Problem of Constrained Choice in Debt Tender Offers and Recapitalizations, 58 U. Chi. L. Rev. 1207 (1991)...302 Note, "Distress-Contingent Convertible Bonds: A Proposed Solution to the Excess Debt Problem", 104 Harv. L. Rev. 1857 (1991).336 ROLE OF FORMAL REORGANIZATION PROCESS AND THE INTERPLAY AMONG THE BANKRUPTCY AND INSOLVENCY ACT, COMPANIES CREDITORS ARRANGEMENT ACT AND PRIVATE WORKOUTS T.H. Jackson, The Logic and Limits of Bankruptcy Law, 'The Role of Bankruptcy Law and Collective Action in Debt Collection" ch. 1 (1986). 347 Baird, 'The Uneasy Case for Corporate Reorganizations", 15 T. Legal Studies 127 (1986). 360 Bradley and Rosenzweig, "The Untenable Case for Chapter 11" (1992) 101 The Yale Law Tournal 1043. 380 Warren, "The Untenable Case for Repeal of Chapter 11", (1992) 102 The Yale Law Tournal 437. 407 Companies' Creditors Arrangement Act R.S., c. C-25. 450 Bankruptcy and Insolvency Act. Part HI, Div. 1, sections 50-66. 454 Knowles and Zimmerman, "Further Developments and Trends in the Companies' Creditors Arrangement Act: 1994" the Insolvency Institute of Canada November 1994. TAX CONSIDERATIONS AND OVERVIEW Boyle, Distress Preferred Shares: A Primer, 4 Can. Banking Law 563 Newsletter 7-8 (Jan. 1991).