Young Conaway Stargatt & Taylor

The Delaware firm advised two bankrupt Kyrgyz subsidiaries of Canadian miner Centerra Gold in a contentious Chapter 11

History of the practice

Young Conaway Stargatt & Taylor was founded in 1959 by Hy Young, James Conaway, Bruce Stargatt and William Taylor. Its highly regarded bankruptcy and restructuring practice – the largest in the US district of Delaware – has experience across a number of sectors, including energy, financial and professional services, food and beverages, healthcare, media and real estate.

John Dorsey, a former general counsel and bankruptcy partner at the firm, was sworn in as a US bankruptcy judge for the District of Delaware in June 2019.

Network

The bankruptcy group is based in Wilmington and has played a leading role in most significant bankruptcies in the district. Partners Joseph Barry and Sean Beach became co-chairs of the practice in 2019, taking over from Pauline Morgan, who remains with the firm as a partner.

The wider firm also has offices in Georgetown and New York.

Who uses it?

Young Conaway Stargatt & Taylor represents debtors, creditors’ committees, secured and unsecured creditors, purchasers, plan sponsors and shareholder groups in jurisdictions throughout the US and further afield. It has particular experience advising private equity funds on distressed portfolios.

Past clients include Canadian gold miner Crystallex International, Chicago-based publisher Sun-Times Media Group, holding company Indalex Holdings Finance and one of the oldest professional baseball teams in the US, the Los Angeles Dodgers.

Historic track record

The firm played a major role in the huge US$7.3 billion cross-border insolvency of global telecoms group Nortel Networks, advising the joint administrators of Nortel Networks UK and its affiliated debtors in the US.

Morgan was instructed by the world’s largest print maker, AbitibiBowater, in the cross-border restructuring of its US$6 billion debt. It successfully emerged from Companies’ Creditor Arrangement Act (CCAA) and Chapter 11 proceedings at the end of 2010 and later changed its name to Resolute Forest Products.

In New York, it served as special counsel for Irving Picard, the trustee to the Madoff estate, who is charged with unpicking the US investor’s US$65 billion Ponzi scheme and paying out creditors.

Young Conaway Stargatt & Taylor also helped to complete the US$2.7 billion restructuring of Ukrainian steelmaker Metinvest via three schemes of arrangement in the UK filed in parallel with three separate Chapter 15 recognition proceedings in Delaware. Baker & McKenzie and Allen & Overy advised on the UK schemes, while Young Conaway Stargatt & Taylor took care of the US side. All three firms picked up an award for the deal at the inaugural GRR Awards ceremony in 2017 for “innovation in cross-border insolvency and restructuring”.

In 2017, following the global recall of around 120 million faulty airbag inflators produced by the Takata group, three of its Japanese debtors hired Young Conaway Stargatt & Taylor as US counsel in Chapter 15 proceedings to recognise their Tokyo bankruptcies, and in a Chapter 11 for US affiliate TK Holdings. The Delaware bankruptcy court recognised Takata’s Japanese bankruptcy in November 2017, rejecting objections from drivers who had commenced multi-district litigation against the group. In April 2018, all of Takata’s global assets bar those relating to the manufacture of airbag inflators were sold to Michigan-based competition Key Safety Systems for US$1.6 billion, after a settlement was reached between the company, creditor groups and injured drivers.

In 2019, Young Conaway Stargatt & Taylor helped the top company of multinational logistics group Syncreon to secure US recognition of its English scheme of arrangement. Syncreon changed its New York law-governed debt to English law to complete the scheme as part of a restructuring across the UK, the US, Canada and the Netherlands.

Recent events

Jaime Luton Chapman in Delaware was elected to join the firm’s partnership in January 2021.

Top cases of the research period

Young Conaway Stargatt & Taylor is acting as counsel to a pair of Regus Corporation entities as debtor-in-possession (DIP) lender and pre-petition secured lender to a number of co-working space providers in Chapter 11 cases that are pending in Delaware under the name RGN-Group Holdings et al. The debtors, ultimately owned by Jersey-registered, Swiss headquartered International Workspace Group (IWG), have over 1,000 locations across the United States and Canada. Some have obtained recognition of their Chapter 11 from an Ontario court, while 39 of IWG’s Canadian subsidiaries also separately commenced CCAA proceedings amid fears that the Chapter 11s may have led to a technical default on their Canadian leases. Young Conaway helped the DIP lender to provide a US$140 million multi-draw term loan facility to RGN in the Chapter 11, which was amended twice since the facility was entered.

Partners Morgan and Kara Hammond Coyle acted as co-counsel and conflicts counsel to two Kyrgyz subsidiaries of Canadian miner Centerra Gold – Kumtor Gold (KGC) and Kumtor Operating (KOC) – in Chapter 11 cases before the Southern District of New York (SDNY) bankruptcy court. Owing to potential conflicts, the team also served as lead counsel to the debtors in negotiating a DIP financing from their parent. Centerra Gold claimed that the Kyrgyz government had “unjustifiably” seized its mining operations in Kyrgyzstan in May 2021, a day after it filed an arbitration against the state to stop that happening, and just days after a local court slapped one of its local subsidiaries with a US$3 billion environmental fine. The parent subsequently initiated a Chapter 11 to prevent the government from taking any further steps. The SDNY bankruptcy court sanctioned Kyrgyzstan in July 2021 for obtaining a local injunction to nullify the corporate resolutions that had authorised the debtors to file for bankruptcy. In April 2022, the Canadian miner announced it had reached a settlement with the Kyrgyz government to exit the state – and Chapter 11.

Jim Patton, chairman emeritus of Young Conaway, is currently acting as future claimants’ representative for potential victims of talc exposure in Imerys Talc’s Chapter 11 proceedings, with the firm as his counsel. US and Canadian subsidiaries of the French talc producer entered Chapter 11 in February 2019 after the group faced thousands of lawsuits alleging that its products cause cancer. A Canadian arm of the business has also sought recognition of its Chapter 11 under the CCAA in Canada.

The firm continues to be counsel to a group of Cayman Islands-incorporated funds under the Zohar name on their US$1.8 billion Chapter 11 and on the separate Chapter 11 of Dura Automotive Systems, a company to which they made term loans. In the Dura case, the firm successfully challenged a proposed debtor-in-possession financing by a Dura insider on its clients’ behalf and got the venue of the case transferred from Nashville to Delaware.

Since the summer of 2021, Morgan and partners Sean Greecher and Andrew Magaziner have been working alongside Simpson Thacher & Barlett for four Chilean debtors and on Colombian debtor that are part of Corp Group Banking, one of Chile’s largest conglomerates, as they seek to restructure more than US$1.8 billion in debt via Chapter 11. The debtors directly and indirectly own 27.2% of the equity of publicly traded Chilean bank Itaú Corpbanca, as well as 10.3% of its Colombian bank subsidiary. The Delaware bankruptcy court approved their liquidation plan in June 2022, which envisages that they, and the group’s billionaire controller Alvaro Saieh, will pay unsecured creditors 9% of their claims.