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Business Bankruptcy

RECOMMENDED READING: The Lender Made Borrower Waive Its Right to File Bankruptcy – Enforceable?

Your company’s loan agreement contains a waiver of the company’s right to file a bankruptcy case.  Enforceable?  No, for it contravenes public policy. Your company’s formation documents require that any bankruptcy filing be authorized in a certain manner (e.g., approval of a certain percentage of directors, partners, or members).  Enforceable?  Many such restrictions have been […]


How Much Can I Add to My Claim? (says Lender) How Much Liquidity Will I Have? (says Reorganizing Debtor): On the Payment of Post-Petition Interest

Your company owes substantial loan principal secured by real property that your company is developing into a hotel, condominiums, and a nightclub. Your company defaulted on the construction loan by missing some payments and filed a chapter 11 petition with the strategic goals of making operations more efficient and further developing the real property to […]


RECOMMENDED READING: PACA Claims in Bankruptcy

Certain suppliers of agricultural goods get paid ahead of secured party, both inside bankruptcy and outside bankruptcy. The suppliers benefit from a federal statutory trust imposed to protect them from nonpayment. The goods involved are “fresh fruit and fresh vegetables of every kind and character” – and regulations set the limits on what qualifies. Suppliers […]


KUNEY’S CORNER – Cramming Down a Chapter 11 Plan by Giving Secured Creditor Substitute Collateral

Can a chapter 11 debtor confirm a plan that gives a hostile secured creditor a lien on an orange as a substitute, in essence, for the secured creditor’s lien on an apple that the debtor wants to keep and use?[i] Yes, if the value of the new lien meets the test of “indubitable equivalence” with […]


Bid Now or Forever Hold Your Peace: Challenging the Results of a Section 363 Sale in Bankruptcy (In re New Energy Corp.)

You would like to purchase wind turbines in a lease-to-own scenario, that is, you would like to take possession of certain items and pay for the purchase or ownership over time or in a lump-sum at some point in the future.  You prefer this mode to an outright cash purchase because of your other cash […]


Meridian Sunrise Village: Highlighting Some Loan-to-Own Risks

You are a PE Fund manager. Your Fund employs loan-to-own strategies 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 else to block confirmation of a plan by other parties. For a plan to be approved […]


KUNEY’S CORNER – Cramdown: An Impaired Class of Claims Says “No” But the Plan is Confirmed Anyway

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 creditors who are not getting paid in full […]


Opening the Kimono: Operational and Financial Reporting Obligations at the Outset of a Chapter 11 Case

While providing numerous advantages to the companies that choose to invoke it, chapter 11 also imposes significant and sometimes burdensome public reporting obligations on them – hence the metaphor of the opened kimono. Because of the debtor’s reporting obligations, creditors and other parties with an interest in the chapter 11 case (such as potential purchasers […]


Assessing Potential Return – When the PBGC Files a [Huge] Claim in a Bankruptcy Case

What should interested parties in a bankruptcy case monitor when the Pension Benefit Guaranty Corporation (PBGC) files a claim in the case as an unsecured creditor? When a company that has filed a petition in bankruptcy sponsors the type of pension plan insured by the PBGC, it is more likely than not that the pension […]


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