Business Bankruptcy

Understanding the Right to Credit Bid After Radlax [Editor’s Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to [email protected] and we will try to answer it.] Question A private equity investor wrote in recently asking us to address credit bidding in the aftermath of Radlax. Answer For investors who are unfamiliar with the concept, the right to credit bid is the “right of the secured creditor under the Bankruptcy Code to use its secured claim against a […]

What Distressed Asset Investors Can Glean from Low Interest Rates, Rising Asset Prices and Insolvency on the Horizon DailyDAC readers know that we try to confine ourselves to publishing “evergreen” thought leadership—general education for business owners and investors about business bankruptcy, its alternatives, and related subjects. There isn’t a stark line between the news of the day about the Markets and the Economy, on the one hand, and the world that is our stock and trade. We have, in the past few weeks, had a number of conversations with some […]

The ABCs of ABCs, Business Bankruptcy, & Corporate Restructuring/Insolvency In the last two installments of this series, we introduced you to things a company should consider before deciding whether to file chapter 11, and a timeline for understanding how a “typical” chapter 11 case proceeds. In this quick little ditty, we want to make sure you understand four concepts that permeate every chapter 11 case except, perhaps, a prepack. 1. The Automatic Stay When a bankruptcy case is filed, an “automatic stay,” is triggered under Bankruptcy Code § 362. The automatic […]

Does Corporate Counsel Represent the Executive or the Company? The F-Squared Investments Bankruptcy is a Warning for Executives [Editor’s Note: Russell C. Silberglied ([email protected]) is a director of Richards, Layton & Finger, P.A. The views expressed in this article are those of the author and not necessarily those of Richards, Layton & Finger or its clients. Mr. Silberglied and RL&F represented F-Squared in its chapter 11 case, but were not counsel of record in the SEC action described in this article.]   What exactly does it mean when a company’s […]

Creative Destruction and an Inevitable Fall: What Can We Learn From the Penthouse Magazine Bankruptcy? Penthouse International, publisher of Penthouse Magazine, sold for $11.2 million in June of 2018. The company was worth about $700 million (adjusted for inflation) at its height. The latest Penthouse Magazine bankruptcy highlights just how far Penthouse has fallen, and what lessons can be learned regarding bankruptcy in general. The New Owner The buyer was WGCZ, which also owns XVideos.com and Bangbros.com. XVideos, in turn, functions as an aggregator (just as YouTube is an aggregator […]

What is the Consolidated Appropriations Act? Congress passed the Consolidated Appropriations Act, 2021 on December 21, 2020, and President Trump signed the massive act into law six days later, when it became effective. The act includes several changes to title 11 of the United States Code, which is usually called the “Bankruptcy Code,” and most changes sunset on either the first or second anniversary of the effective date of the act. Here are the changes you need to know, in the order they are presented in the act. Property That […]

The ABCs of ABCs, Business Bankruptcy & Corporate Restructuring/Insolvency [Authors’ Note: Before going any further, read Installment 4: Chapter 11—If You’ve Seen One, You’ve Seen Them All. While you can generally read any installment in this series in any order or even by itself, this one is an exception…] And now, we present to you, the five stages of a “typical” chapter 11 case (subject to the caveats you read in our previous installment). By the way, make sure you read to the end so you can see what a […]

Lender Liability Law Protects Distressed Borrowers from Unfair Practices 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 their principal back. If the borrower complies with the terms of the loan, all is good. If the borrower breaches, then the lender has a number of rights and remedies. Sometimes, however, a lender overreaches. One example of an overreach is when a lender exerts control over the daily activities […]

What Happens When Your Consignee Becomes Distressed and What You Can Do I was speaking with a client yesterday about consignment arrangements. What we discussed should be of interest to any company that sells goods using a consignment arrangement, and I thought I would share. What is a Consignment Arrangement? In a consignment arrangement, the consignor, as owner of the goods, delivers them to a consignee.  The consignee, in turn, will try to sell those goods to customers. Be Careful Not to Mischaracterize the Proceeds You Expect from a Consignment […]

Facing Personal Liability for Business Debts? Who Ya’ Gonna Call?1 People who are not bankruptcy experts but who know something about the subject tend to put all bankruptcy attorneys into one of two buckets: (a) attorneys who help people file bankruptcy; and (b) attorneys who help businesses file bankruptcy. This distinction is mostly correct. Generally speaking, there are two types of people who file bankruptcy: (a) people who incurred debt for personal or household purposes, which are “most people;” and (b) people whose debt derives from some form of business […]