King & Spalding represented Nantahala Capital Partners in connection with Global Eagle Entertainment’s request in the Delaware Bankruptcy Court for an equity trading injunction against Substantial Shareholders (i.e., shareholders who owned over 4.5% of the common stock of the Debtor as of the Petition Date) in order to preserve the Debtor’s ability to utilize its net operating losses and other tax attributes (estimated in this case to be $800 million). Equity trading injunctions are rarely challenged and typically “rubber stamped,” especially in debtor-friendly venues like Delaware. Nantahala believed that ultimately the equity it held would be rendered worthless under the Debtor’s to-be-filed plan but, in the meantime, there was an active equity trading market so that its stock interest had a meaningful present market value. Nantahala objected to the equity trading injunction motion arguing that the automatic stay did not apply to the trading of its own equity securities and, if it did, it was entitled to be compensated for the loss of the ability to presently sell its stock. The Debtor and the Ad Hoc First Lien Lender Group (which is seeking to purchase the Debtor’s assets and utilize the tax attributes) opposed Nantahala’s position, and the Bankruptcy Court sided with Nantahala. The Bankruptcy Court questioned whether the automatic stay applied but it said if it did, it was going to compensate Nantahala for the loss of its ability to trade its shares. The Bankruptcy Court scheduled a trial on this issue and, before that occurred, the Debtor abandoned its request to enjoin Nantahala’s trading activity.