Business Bankruptcy

The SBA’s Views, Court Rulings and Options for Your Company You need to restructure your debt and/or deal as soon as possible with assertive creditors. You want to preserve your company, and you would benefit (or already have benefited) from Paycheck Protection Program (PPP) funds as a bridge. What do you do? Can you risk Chapter 11? Are PPP loans for Chapter 11 debtors available? If not, what are your options? The CARES Act – which has led to two rounds of funding thus far – has proven to be […]

Considerations for Distressed Private Equity   You are a PE fund manager. Your fund employs a loan-to-own strategy (also referred to as distressed private equity) to effect take-overs of target companies. You are accustomed to exerting powerful leverage in chapter 11 cases, particularly when you buy enough claims to confirm a plan or to block confirmation of a plan by other parties. For a plan to be approved consensually, each class of claims or interests must approve it. Approval by a class of claims requires a “yes” vote by a […]

Is the Jury In or Out on Chapter 11 Bankruptcy Gifts?   The gifting doctrine in bankruptcy is not new and often is used to obtain creditor consensus to a debtor’s proposed exit—either through a chapter 11 plan or a Section 363 sale. Bankruptcy “gifts” typically involve a structurally senior class voluntarily giving some of its property or distribution to a structurally junior class of creditors or equity holders.  Bankruptcy courts across the nation have reached differing and, at times, seemingly inconsistent decisions regarding the gifting doctrine. Some courts view […]

Application of Section 503(b)(1)(A) and 503(b)(9) in the Sears Chapter 11 Filing Precedent setting rulings in the Sears chapter 11 case could radically alter how vendors support companies who file for bankruptcy in the future. Historically the presumption and practice in the vast majority of bankruptcy cases has been that vendors receive priority status for goods delivered beginning not only 20 days prior to the filing, but also continuing after the filing. Bankruptcy code Section 503(b)(9) applies to goods delivered prior to the petition, and Section 503(b)(1)(A) applies afterwards. Because […]

The ABCs of ABCs, Business Bankruptcy, & Corporate Restructuring/Insolvency Who are you? Maybe your company needs to file chapter 11. Or one of your customers recently filed. Or maybe a competitor is in (or is rumored to be close to filing) chapter 11. Maybe you’re thinking about getting into the corporate restructuring industry yourself. Regardless of your answer, if what you’re after is a tour of the turnaround, restructuring, and insolvency industry (the “Industry”), you came to the right place. A Little History About Law & Economics The Industry began […]

What Can An Ancient Greek Playwright Tell Us About Bankruptcy? Some of the best lessons on fraud and deceit in bankruptcy were written around 2,500 years ago. Yes, all the way back in 423 B.C., the Greek playwright Aristophanes offered his thoughts for posterity in his comic play “The Clouds,” which tells the story of Strepsiades, a man unable to even sleep because of the huge debts his son has incurred. The play chronicles his various attempts to learn the art of “Unjust” argument from Socrates and the sophists, so […]

A Series on the ABCs of ABCs, Business Bankruptcy & Corporate Restructuring/Insolvency Since a judge presides over a chapter 11 proceeding, one might assume that a chapter 11 case is like any other commercial litigation matter, with one party on each side of the case: a plaintiff and a defendant. One would be wrong (Felix Unger taught us what happens when we “ass-u-me”). In this installment of our series on business bankruptcy, restructuring and insolvency, we look at debtors, chapter 11 trustees, types of creditors and other parties involved in […]

A Series on the ABCs of ABCs, Business Bankruptcy & Corporate Restructuring/Insolvency Greetings, Dear Reader: It seems you’re interested in learning how to deal with corporate distress, and we’re glad you’re here. But let’s first make sure you got on the right plane. Maybe you… Are a C-suite executive of a business that’s considering buying a failing competitor on the cheap Manage a private equity or hedge fund Are a junior associate in the restructuring or special situations group of a law, investment banking, or accounting firm Are a credit […]

Editors’ 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: How do I know if I should request relief from a debtor’s automatic stay? ANSWER: What is the Automatic Stay? Section 362 of the Bankruptcy Code provides for the automatic stay. The automatic stay, triggered immediately upon the debtor’s filing of a bankruptcy petition, bars nearly all actions against the debtor and its property, including actions to exercise […]

An Unfortunate Case for Unsecured Creditors A settlement agreement in the Mega RV Corp. bankruptcy highlighted the interplay between an overzealous lender and a repentant business owner who came together to cooperate and provide a windfall recovery to unsecured creditors. Ultimately, through the machinations of the bankruptcy case, the settlement proved to be insufficient to provide the windfall that was optimistically expected only a short time earlier. Who is Mega RV? Mega RV was founded in 2000 by Mike McMahon as McMahon’s RV. They were in the business of selling […]