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Business Bankruptcy

Attorney-client communication is not always secret in bankruptcy

Corporate Attorney-Client Privilege is in the Hands of the Bankruptcy Trustee

When is Your Company’s Attorney-Client Communication No Longer a Secret?   Imagine if every secret and strategy that you had ever shared with your attorney were laid open for the world to see. A trustee in a business bankruptcy case may well have the power to review, publish, and wield all of the debtor’s attorney-client […]


90 Second Lesson: Receivership vs Bankruptcy

The Benefits and Downsides of the Receivership Process   [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: Do secured creditors benefit more from a debtor’s bankruptcy or federal court receivership? ANSWER: […]


Wind Turbine LLC tries to challenge a 363 sale

Can You Challenge a Section 363 Sale? Bid Now or Forever Hold Your Peace

How Natural Chem Holdings Tried to Beat the Wind in a 363 Sale Appeal    You would like to buy wind turbines in a lease-to-own scenario—that is, you would like to take possession of certain items and pay over time or in a lump-sum at some point in the future. You prefer this mode to […]


How to read a balance sheet

Finding Truth in a Debtor’s Balance Sheet: Analyzing Assets, Liabilities and Equity

How to Read a Balance Sheet Beyond Surface Level   A balance sheet provides a snapshot of a company’s financial condition as of a specific date by presenting three components: assets, liabilities and equity.  While a balance sheet may help its user to evaluate a company for stability, investment potential, and creditworthiness, it should not […]


Meridian Sunrise Village distressed private equity

Meridian Sunrise Village: Risks of Loan-to-Own Strategy

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 […]


Bankruptcy gifts from senior class to junior creditor

Bankruptcy Gifts: When a Court Will Look a Gift Horse in the Mouth

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 […]


Should you sign an involuntary bankruptcy petition?

90 Second Lesson: I’ve Been Asked to Sign an Involuntary Bankruptcy Petition. Should I?

The Advantages and Disadvantages of an Involuntary Petition   QUESTION: The credit manager of an Akron-based company asks: “One of our commercial accounts is pretty far behind in paying on our invoices. Another vendor approached me and asked me to join in signing an involuntary bankruptcy petition. Is there any legal risk in doing this?” […]


Calculating valuation methods

Introduction to Distressed Debt Analysis: 4 Company Valuation Methods for Investors

How You Can Use Your Personal Experience and Expertise to Formulate and Investment Thesis   It’s time to take an in-depth look at distressed debt investing and how you can use your personal experience in conjunction with company valuation methods to make decisions. Most investors will want to enter the distressed investing space by relying […]


Swan deals in recharacterization

The Elegant Swan and Clumsy Duck: What is Recharacterization in Bankruptcy?

How the Recharacterization of Debt Impacts Creditors   The line between a loan and an equity investment isn’t always clear. In these cases, those who represent unsecured creditors can impact the distribution on claims in the creditor’s favor. This is done through the recharacterization of debt. In bankruptcy, a debt claim has a higher priority […]


Fisker Auto. Holdings 363 sale credit bid

The Fisker Case: My Credit Bid Capped at the Amount I Paid for the Debt?

Should Secured Creditors and Buyers of Distressed Assets Worry About Facing Limits On Their Credit Bids?    One way to purchase assets (including the assets of a business as a going concern) is to prevail at a foreclosure sale or a § 363 bankruptcy auction with a credit bid. The first step is to acquire […]


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