American Roads Obtains Approval of Prepackaged Bankruptcy

August 28, 2013

Cleary Gottlieb, as counsel to American Roads, the owner of four toll bridges in Alabama and the operator of the Detroit-Windsor Tunnel, obtained confirmation of a prepackaged chapter 11 bankruptcy plan on August 28, 2013 after a Southern District of New York Bankruptcy Court ruled that an Ad Hoc Committee of Bondholders lacked standing to appear in the Chapter 11 cases because the bondholders had delegated and waived enforcement rights pursuant to no-action clauses in prepetition financing documents.

The prepackaged chapter 11 proceeding was filed on July 25, 2013 to effectuate a restructuring of approximately $830 million in secured debt issued in 2006. The reorganization plan confirmed by the Court will transfer ownership of American Roads to Syncora Guarantee Inc., the senior creditor of American Roads that insures $496 million in bonds issued by American Roads. Bondholders will receive no recoveries under the plan but will preserve their rights under the bond insurance policies and will have the opportunity to participate in a bond release offer pursuant to the plan. The Court’s decision represents the first time that a bankruptcy court has ruled on issues of standing in the context of an insured unitranche debt financing.