Business Bankruptcy
Dealing with Corporate Distress 01: Hello Darkness, Our Dear Friend
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 […]
Selling Distressed Assets: The Assignment for the Benefit of Creditors Alternative
An Alternative to Chapter 11 and Chapter 7 Liquidations Financially distressed companies faced with unlikely prospects for reorganization – and the creditors who can influence their decisions – often take advantage of the chapter 11 liquidation option, where the debtor’s assets can be sold free and clear of all liens, claims, and encumbrances. This leaves […]
When to Request Relief from the Automatic Stay
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 […]
Mega RV: Unsecured Creditors Fall Short in Bankruptcy Settlement
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 […]
Kuney’s Corner – Cram Down: When the Creditor Says ‘No’
The Legal Requirements to Cram Down a Plan on Creditors By filing a chapter 11 petition, the debtor seizes the initiative in proposing a reorganization plan—which is to provide how soon, in what amount and in what manner creditors’ claims are paid.[i] But a debtor does not necessarily get its way. A class of […]
Personal Property Appraisals 101
What You Should Know Before Hiring a Property Appraiser Are you a lender who needs an appraisal of personal property (machinery, equipment and inventory) in connection with making a loan? Are you a company that needs an appraisal in connection with a capital raise, or some other purpose? Regardless of the reason, there are some […]
The Chief Restructuring Officer: Architect, Force, Leader Towards Change
Navigating an Extreme Environment as CRO The position of Chief Restructuring Officer or CRO is not well defined or understood. This role does not have as much history as the more traditional positions such as CFO, CEO or President. In turn, this leaves room for much misunderstanding. The CRO may be thought of as simply […]
Buying Operating Assets from a Distressed Seller
A Practical Guide to Assessing Legal Risk and Potentially Fraudulent Transfers “One man’s rubbish is another man’s treasure.” -William & Robert Chambers Journal of popular literature, science and arts (1879) “A little learning is a dangerous thing” -Alexander Pope, An Essay on Criticism (1709) Buying operating assets from a financially distressed seller can […]
90 Second Lesson: What is a “Professional Fee Carve-Out” in Chapter 11?
QUESTION: A commercial banker emailed saying, “We’ve recently had a large asset-based loan default, and the company filed Chapter 11. Our attorney has advised us that we should agree to pay the borrower’s attorneys by letting them get paid from the proceeds of the sale of our collateral. Can this possibly be right?” ANSWER: […]
Demystifying Administrative Expenses in Bankruptcy
Priority Claims in Chapter 11 Bankruptcy Bankruptcy professionals, other business professionals, and trade vendors would be reluctant to provide services or otherwise extend credit on an unsecured basis to an insolvent entity like a bankruptcy debtor, unless their claims to payment were somehow ensured. In addressing this predicament, Congress provided that holders of unsecured […]