Panel:“ Filer Beware: Lurking Priority Issues That Can Affect Reorganization Cases”
Summary by Jason L. Hufendick- NextGen Class 2025
The 25th Annual International Insolvency Conference hosted in São Paulo featured a distinguished panel of insolvency experts to explore lurking priority issues that can affect reorganization cases. The panel provided a comparative analysis of creditor priorities, statutory protections, and the practical challenges that arise in complex cross-border restructurings, including the United States, Canada, Brazil, and Norway. The panelist were Stine Dalenhag Snertingdalen( Kvale Advokatfirma), Kelly DiBlasi( Weil, Gotshal & Manges LLP), Fabio Rosas( Lefosse), and Lance Williams( McCarthy Tetrault LLP).
The panelists discussed various situations
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where a creditor may be entitled to priority over other creditors. In many cases, the priority can arise by statute or local law. In other cases, the priority is ordered by the court supervising the insolvency proceeding as a means to stabilize the debtor’ s operations and incentivize key
stakeholders to remain engaged throughout the restructuring process.
For example, insolvencies in Canada and the United States must contend with statutory protections for employee wages. Brazil, on the other hand, does not provide such priority( although wage claims in Brazil are entitled to being treated in a separate class in connection with a plan).
The most common area of court-ordered priority is through post-bankruptcy financing or“ DIP Financing.” In the United States and Canada, the DIP financing can( and customarily does) benefit from priority over all other creditors for funds advanced in connection with the proceeding. Other examples of claims entitled to priority often arise in connection with environmental damages, pensions, critical suppliers, and unpaid taxes.
The discussion highlighted the need for engaging professionals experienced in the applicable jurisdiction in connection with insolvencies that touch multiple jurisdictions. The priority of claims may not be obvious in all cases and can vary across jurisdictions.
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