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Chapter 7 Bankruptcy

90 Second Lesson: If I File a Chapter 7 Bankruptcy, Are the Assets of My Single-Member LLC Safe From the Trustee?

QUESTION: A small business owner emailed us, on behalf of a friend, to ask whether assets in a single-member LLC could be used by a Chapter 7 Trustee in the LLC member’s personal bankruptcy case to satisfy creditors’ claims against the member. ANSWER: We can imagine this question arising where the member’s business is owned […]


The “Absolute Priority Rule” and Other “Rules” of “Priority” in Bankruptcy

Are They Really “Absolute,” Are They Really “Rules,” and Do They Always Provide “Priority” to Some Claimants Over Others? At its core, corporate bankruptcy addresses the problem of the “inadequate pie.”  While occasionally the debtor will be solvent, in most cases, the debtor will, for lack of a better term, be “bankrupt”—that is, it won’t have […]


Ponzi Scheme Lender May Be On The Hook, After All!

The Skinny The Sixth Circuit recently revived a trustee’s $17 million avoidance and claw-back suit against a lender, finding that the lender’s existing security interests could have been extinguished via novation. Impact: secured lenders entering into amended and restated loan documents should adopt definitive and irrefutable language demonstrating that the parties do NOT intend for the new […]


Dealing With Distress For Fun & Profit – Installment #3 – The Bankruptcy Code

A written tour of business bankruptcy and its alternatives In order to understand the options a financially distressed business (or its owners, creditors, or potential buyers) has, one has to understand the Bankruptcy Code. The Bankruptcy Code is contained in Title 11 of the U.S. Code and is divided into chapters. Chapters 1, 3 and […]


Dealing With Distress For Fun & Profit – Installment #1 – Bankruptcy Basics

A written tour of business bankruptcy and its alternatives You manage a private equity or hedge fund. Or maybe you work for a family office. Or maybe you’re the CEO or CFO of a business that has a competitor that is failing and you are considering trying to buy it on the cheap. Or perhaps […]


Bankruptcy Considerations in a Collections Action

Understanding what can occur during a collection action can be vital in determining which accounts to pursue. One common occurrence is that the debtor files for bankruptcy. So, what exactly is bankruptcy? Bankruptcy is a procedure which allows debtors to reorganize their debts and potentially liquidate certain assets. It also allows a debtor to receive a discharge of […]


When Her Smile is a Thin Disguise—How to Stop a Lying Judgment Debtor from Obtaining a Bankruptcy Discharge

A recent decision by the Seventh Circuit Court of Appeals will make it much more difficult for debtors to get a bankruptcy discharge when they have lied or failed to give required information during a prior post-judgment collection proceeding. The opinion, cited as In re Marcus-Rehtmeyer, No. 14-1891 (7th Cir. Apr. 28, 2015) should enhance […]


Selling Distressed Assets: The Assignment for the Benefit of Creditors (ABC) Alternative

Editor’s Note: This article provides a broad overview of the use of state law assignments for the benefit of creditors (ABCs) as an efficient alternative to chapter 11 and chapter 7 liquidations conducted under federal law. For a great discussion on other options available to struggling businesses, we recommend this webinar. Financially distressed businesses faced with unlikely […]


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