What you need to know as a secured lender to a borrower who goes into bankruptcy you should know already, well in advance. If your borrower’s bankruptcy filing has taken you by surprise, please refer to my next article in[...]
Insufficient liquidity shrinks the range of options for a financially distressed business. The metaphor of a melting ice cube is often used to illustrate the situation. When the cash runs out and the company is unable to pay its employees or vendors, the ice cube has melted. The business has failed, and recoverable value has collapsed.
Bankruptcy Valuation Valuation—the estimation of an entity’s worth—plays a crucial role in all stages of a commercial bankruptcy, as well in any out-of-court restructuring.¹ Valuation can be critical at the beginning of a bankruptcy case in determining whether the debtor[...]
A company’s “capital structure” is the array of its liabilities and equity. Capital structure commonly consists of three main components: working capital (or operating debt), financing debt, and equity.
“The time to buy is when there’s blood in the streets.” - Baron Rothschild Don’t Panic, There Are Many Opportunities in Bankruptcy When a client or a competitor files for bankruptcy, it is natural to reflect on the downside. What’s[...]
NAFER (the National Association of Federal Equity Receivers) held another wisdom-rich conference in October, this time at the Drake Hotel in Chicago. It was the seventh annual event and attracted 200 attendees. The conference included the Training Camp as well[...]
Editor’s Note: This is an updated version of an article published in May of 2013. If you are a vendor, service provider or another unsecured creditor to a chapter 11 debtor, you cannot be blamed for feeling like a duped[...]
Chapter 11 bankruptcies find the debtor generally to be insolvent, but not always. Occasionally, a debtor will emerge from the bankruptcy process as a solvent entity, and in those situations, Bankruptcy Code §726(a)(5) may entitle creditors of the debtor’s estate[...]
The Life, Death and Many Reincarnations of Penthouse Magazine Penthouse International, publisher of Penthouse Magazine, sold for $11.2 million in June. The company was worth about $700 million (adjusted for inflation) at its height. The latest Penthouse Magazine bankruptcy highlights just[...]
The relationship between a lender and borrower can be complex. The borrower wants capital to run and grow its business and the lenders want to earn a return and eventually get its principal back. If the borrower complies with the[...]
A written tour of business bankruptcy and its alternatives. This is the latest in the series, Dealing with Distress for Fun & Profit, which you can read from the beginning if you like. In this bat-installment, we turn to what[...]
One of the interesting aspects of business bankruptcy cases is that both the businesses and the issues their bankruptcy proceedings present can differ so much. In recent years, for example, we have seen department stores (Macy’s, Federated), toy retailers (Toys[...]
In our last article, we discussed the U.S. Supreme Court’s acceptance for review of the Seventh Circuit’s decision in FTI Consulting, Inc. v. Merit Management Group, LP, 830 F.3d 690 (7th Cir. 2016), cert. granted, No. 16-784, 197 L. Ed.[...]
Editor’s Note: Part 1 of this article laid out the prima facie case a plaintiff needs to have in order to sue for a preference, outlined the major defenses and explained the importance and use of certain key documents in[...]
Your company has just been served with a preference complaint. The complaint seeks to recover tens or hundreds of thousands of dollars even though your company already has taken a loss on the debtor’s accounts. Your initial response is anger[...]
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