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Automatic Stay

Creditors looking to pursue a collections action should understand how Chapter 7 and Chapter 13 bankruptcy processes can affect efforts to collect.

When your borrower files bankruptcy, choosing to cooperate can lead to a more successful restructuring or sale. Here’s how to protect yourself if you do.

An assignment for the benefit of creditors (ABC) can be a faster and more cost-effective alternative for a chapter 11 or 7 liquidation. Understand more about this alternative for selling distressed assets effectively.

Bankruptcy Reporting Requirements Before and During Chapter 11 One of the  central principles of bankruptcy is that a debtor should have the benefit of a “fresh start.” However, to accord such relief, the Bankruptcy Code, Bankruptcy Rules, and case law require transparency from the debtor and other parties in interest. As such, strict compliance with bankruptcy reporting requirements is a primary responsibility of a debtor in possession (DIP). Courts expect a DIP to keep proper records and file required disclosures and reports in a timely manner. A DIP’s failure to […]

The ABCs of ABCs, Business Bankruptcy, & Corporate Restructuring/Insolvency In Installment 5, we walked through the lifecycle of a hypothetical traditional chapter 11, and in Installment 6 we discussed key concepts you must comprehend in order to understand any chapter 11 case. Now we pull the camera back and turn our focus away from chapter 11 specifically, to look more broadly at the options available to a company (that is, a “debtor”) and to its various constituents (e.g., creditors and equity owners) when that company is experiencing financial distress so […]

2020 Saw Increased Healthcare Provider Bankruptcies. What Should Companies & Restructuring Professionals Know Moving Forward? Healthcare providers face many pressures, including costs associated with regulatory compliance and necessary technological and infrastructure investments. Congress’ repeated attempts to reform healthcare legislation have long created uncertainties for the healthcare industry. A PwC report predicts that throughout 2021, healthcare will be among retail, oil and gas and hospitality as the sectors most likely to face restructurings. The COVID-19 pandemic has led to increased healthcare bankruptcy activity due to cancellation of elective procedures and imbalances […]

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 […]

How Liquidity Becomes the Kryptonite of a Distressed Company’s Capital Structure A company’s “capital structure” is the array of its liabilities and equity. It is often described by the debt to equity ratio, which is the amount of total debt divided by total equity. Capital structure commonly consists of three main components: working capital (also known as operating debt), financing debt, and equity. Working capital, or operating debt, includes accounts payable, accrued expenses, and other current liabilities usually due within one year. Financing debt includes senior bank financing, leases, and […]

How Unique Issues in Healthcare Restructuring Set It Apart from Corporate Restructuring   Over the past decade, arguably no industry experienced such dramatic regulatory change or consistent legislative uncertainty as healthcare. Today, continued efforts to repeal, defund, replace, or amend the Affordable Care Act—coupled with rising pharmaceutical costs, increased competition, massive capital investment expenses, etc.—virtually assure a challenging economic environment for healthcare companies for years to come.      However, given the stakes involved—and the unfortunate fact that healthcare restructuring provides little time for “on the job training”—practitioners must enter such engagements […]

Section 1111(b) Election: A Countermeasure for Undersecured, Secured Creditors   Mathew 5:29 – And if thy right eye offend thee, pluck it out, and cast it from thee: for it is profitable for thee that one of thy members should perish, and not that thy whole body should be cast into hell. In a previous article about cram downs, in which a debtor can take steps to confirm a Chapter 11 plan despite rejection from creditors, I referred briefly to an undersecured, secured creditor’s countermeasure: the section 1111(b)(2) election. By […]