CBInsolvency LLC

Thought Leadership

January 2019 – Scheme of Arrangement of U.S.-domiciled Debtor Recognized

Mattress Firm and certain affiliates, the operator of some 3,300 mattress stores in the U.S., filed chapter 11 proceedings in the United States Bankruptcy Court for the District of Delaware in early October and emerged in late November with 700 fewer stores, $525 million in exit financing and a modified capital structure.  A key piece of the restructuring was the English Scheme of Arrangement (“Scheme”) of Stripes US Holding, Inc. (“SUSHI”), the Delaware-incorporated indirect parent of Mattress Firm.  While SUSHI was incorporated in Delaware and had offices in Texas, it also had an establishment in London.

To enable the capital structure restructuring and as a condition to the exit financing, SUSHI had to be released or discharged from all of its obligations, including the approximately USD $203 million outstanding balance of a loan facility.  SUSHI’s Foreign Representative stated that he “believes that Chapter 15 recognition is essential to ensure that the Scheme will be recognized and enforced within the territorial jurisdiction of the United States, although the effectiveness is not conditioned on Chapter 15 recognition.”

CBI principal Dan Glosband (http://cbinsolvency.com/dan-glosband/) was engaged to provide an expert opinion to be presented to the High Court of England and Wales concerning the principles of U.S. law applicable to the recognition of the Scheme under chapter 15 of the Bankruptcy Code and to its enforcement in the United States.  Glosband delivered a 36 page opinion that concluded “that the Scheme will be recognized as a foreign nonmain proceeding and that additional relief embodied in the proposed order granting Chapter 15 recognition would be granted and enforced, enforcing releases and enjoining Scheme Creditors from commencing or continuing any action or proceeding against SUSHI that is inconsistent with the SUSHI Scheme in the United States.  If no Chapter 15 recognition is granted, a United States court could grant comity to the Sanction Order and enforce the Scheme.”

SUSHI’s petition for chapter 15 recognition and related relief was filed on October 24, 2018 and an Order Recognizing Foreign Proceeding and Granting Related Relief entered on November 13, 2018.

The Order may be downloaded or viewed by clicking here. (https://gallery.mailchimp.com/fd8750f565422740fe6fcb424/files/114fec14-0ef5-45e0-a166-646fc9d4a922/CBI_Stripes_Chapter_15_order.pdf)

A November 14, 2018 article in Global Restructuring Review describes the Mattress Firm/SUSHI restructuring, the sanctioning of the Scheme by the English Court – including the expert evidence provided by Glosband’s opinion – and the chapter 15 recognition and enforcement of the Scheme as a foreign nonmain proceeding. The article also refers to the tragic death of Sidley Austin’s Gabe MacConaill in Los Angeles, one of the lead partners on the Mattress Firm case.

The GRR article may be downloaded or viewed by clicking here.   (https://gallery.mailchimp.com/fd8750f565422740fe6fcb424/files/cb7447ae-bcc3-4e52-bfcb-34a2bacd4e73/CBI_GRR_Stripes_Article.pdf)


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In a cross-border insolvency matter, if an expert opinion is required, if skilled mediation or arbitration can help resolve disputes, or if cross-border insolvency is simply unfamiliar territory, CBI can help.

We will be pleased to discuss your cross-border insolvency issues and agree on a case-specific arrangement to assist you.  Please reach out to any of us for a quick and easy assessment of how we can help you. We welcome your thoughts, comments and questions.

clark@cbinsolvency.com (mailto:clark@cbinsolvency.com?subject=e-newsletter%22%20%5Ct%20%22_blank)
esher@cbinsolvency.com (mailto:esher@cbinsolvency.com?subject=e-Newsletter%22%20%5Ct%20%22_blank)
glosband@cbinsolvency.com (mailto:glosband@cbinsolvency.com?subject=e-newsletter%22%20%5Ct%20%22_blank) 

Hon. Leif Clark (Ret.)
Hon. Leif Clark (ret.) (http://cbinsolvency.com/hon-leif-clark/) was a U.S. Bankruptcy Judge for over 25 years. He has an international reputation for influencing the development of insolvency law both domestically and internationally. He has broad experience in international legislative development, the training of lawyers and judges, scholarship and as a sought-after mediator of complex disputes involving finance and insolvency.
Jack Esher
Jack Esher (http://cbinsolvency.com/jack-esher/) has over 25 years of experience as a mediator, arbitrator and neutral adviser, including mediation of cross-border disputes in the country’s biggest cases. A pioneer in developing mediation as an innovative and effective dispute resolution process in insolvency matters, he has conducted mediation and negotiation trainings nationally and internationally for professionals, business leaders and judges.
Dan Glosband
Dan Glosband (http://cbinsolvency.com/dan-glosband/) has 45 years of sophisticated insolvency practice, focusing on cross-border cases. He was part of the small drafting group for the UNCITRAL Model Law on Cross-Border Insolvency, one of the primary draftsmen of Chapter 15 of the Bankruptcy Code and has been an expert witness on U.S. insolvency law in major foreign proceedings.

By Dan Glosband