Table Of Content

N KI S A L A R O DEBT FINANCING AND RESTRUCTURING: B THEORY AND PRACTICE Spring Semester 1997/1998 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. EM USIfii lAW USEASY w JAN ^ 199B FAvi’uii 'a'f lAYI BBgan CF TEMHTO UNIVERSITY OF TORONTO DEBT FINANCING AND RESTRUCTURING: THEORY AND PRACTICE Spring Semester 1997/1998 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. Digitized by the Internet Archive in 2018 with funding from University of Toronto https://archive.org/details/debtfinancingres01murp_4 TABLE OF CONTENTS Page I. INTRODUCTION TO CAPITAL STRUCTURE G. Triantis, Secured Debt under Conditions of Imperfect Information, 211. Legal Studies 225-258 (1992). 1 Jensen, Eclipse of the Public Corporation, 67 Harv. Bus. Rev. 61-74 (Sept. - Oct. 1989). 19 n. SHORT. MEDIUM AND LONG-TERM DEBT FINANCING J.C. Van Home, 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) HI. COMPLEX AND HYBRID DEBT INSTRUMENTS: PRINCIPLES OF FINANCIAL ENGINEERING Finnerty, An Overview of Corporate Securities Innovation, 4 I. App. Corp. Fin. 23 (1992)..... 64 Smithson and Chew, The Uses of Hybrid Debt in Managing Corporate Risk, 4 I. App. Corp. Fin. 79 (1992). 81 Smithson, "A LEGO Approach to Financial Engineering: An Introduction to Forwards, Futures, Swaps and Options," 4 Midland Corp. Fin. I. 16 (1987). 9 2 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 I. 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 Geyer v. Ingersoll Publications Co. (Del. Ch., June 18, 1992 unreported). 167 Editor's note: Credit Lyonnaise 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. Irving Trust Co.. 757 F. 2d 752 (6th Cir. 1985). 196 V. Fischel, The Economics of Lender Liability, 99 Yale L.I. 131, 131-146 (1989). 205 Bennco Liquidating Company v. Ameritrust Company National Association. 621 N.E. 2d 760 (Ohio App. 8 Dist 1993). 223 Nation, Life Without EPA's Rule Interpreting CERCLA'S Secured Party Exemption, 1994 Banking Law Journal 499-506. 227 Jeffrey M.I. "Environmental Liability: A Continuing Source of Concern for Lenders". 235 A.G. Ontario v. Tyre King Tyre Recycling Ltd, et. al. 9 O.R. (3d) 318 (1992). 266 PRIVATE RESPONSES TO FINANCIAL DISTRESS: PRINCIPLES AND PROBLEMS OF CONSENSUAL RESTRUCTURING Haugen and Senbet, "Bankruptcy and Agency Costs: Their Significance in the Theory of Optimal Capital Structure" 23 T. Fin, and Ou. Analysis 27 (1988). 272 - Ill - Page Lickorish, Debt Rescheduling, Butterworths T. of Int. Banking and Financial Law. Jan. 1992 pp. 10-12; 13-14... 284 Coffee and Klein, Bondholder Coercion: The Problem of Constrained Choice in Debt Tender Offers and Recapitalizations, 58 U. Chi. L. Rev. 1207 (1991). 288 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). 322 Baird, "The Uneasy Case for Corporate Reorganizations", 15 T. Legal Studies 127 (1986). 335 Bradley and Rosenzweig, "The Untenable Case for Chapter 11" (1992) 101 The Yale Law Tournal 1043. 355 Warren, "The Untenable Case for Repeal of Chapter 11", (1992) 102 The Yale Law Tournal 437. 382 Knowles and Zimmerman, "Further Developments and Trends in the Companies' Creditors Arrangement Act: 1994" the Insolvency Institute of Canada November 1994. 425 TAX CONSIDERATIONS AND OVERVIEW Boyle, Distress Preferred Shares: A Primer, 4 Can. Banking Law Newsletter 7-8 (Jan. 1991). 513