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Claims

Bankruptcy Litigation Funding

Third-Party Litigation Funding (TPLF) and Issues It Creates In Bankruptcy

Investing in Litigation – The Bankruptcy Code and Third-Party Funding Third-party litigation funding (“TPLF”) is, beyond a doubt, here to stay. In bankruptcy cases, TPLF arises in a number of contexts. First is the TPLF as a pre-petition secured or unsecured creditor—i.e., the TPLF source funded litigation and thereby acquired property rights in litigation proceeds […]


Lender liability and overreach

Lender Liability Claims are Alive and Well: A Case Study

Lender Liability Law Protects Distressed Borrowers from Unfair Practices The relationship between a lender and borrower can be complex. The borrower wants capital to run and grow its business, and the lenders want to earn a return and eventually get their principal back. If the borrower complies with the terms of the loan, all is […]


Boston post-petition interest bankruptcy case

Lender vs Debtor on the Payment of Post-Petition Interest

The Battle Over Post-Petition Interest for Oversecured Creditors In bankruptcy, an oversecured creditor (in which the value of its collateral is higher than its claim) is first in line to be paid. Unfortunately, oversecured creditors are also entitled to post-petition interest (interest that accrues or would accrue after the start of bankruptcy proceedings, regardless of […]


Absolute priority rule

The Order of Claims in Bankruptcy: Absolute Priority Rule, Structured Dismissals and More

Are the Rules Really “Absolute?” 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 enough money or other assets to pay its creditors all they are […]


Receipt of goods in administrative claims

When are Goods ‘Received by the Debtor’ for Purposes of a Section 503(b)(9) Administrative Expense Claim?

Two Decisions that Clarify “Receipt” of Goods in Administrative Expense Claims   Section 503(b)(9) of the Bankruptcy Code1 allows a creditor an administrative expense claim (i.e., a claim with payment priority over other pre-bankruptcy claims) for the value of goods that the debtor “received” within 20 days before filing for bankruptcy. But what precisely does […]


Recharacterization and equitable subordination as tools for altering order of priority of creditors

90 Second Lesson: What is the Difference Between Recharacterization and Equitable Subordination?

Discerning Similar Methods to Lower the Order of Priority of Creditors’ Claims   [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: Jeff P. from Los Angeles asked us to explain the […]


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 […]


A rock climber looks over a precipice, symbolizing investors overcoming their fear of filing an involuntary bankruptcy petition

Getting Over the Scariness of Filing an Involuntary Bankruptcy Petition

The Notorious Case of the Involuntary Bankruptcy Mention involuntary bankruptcy to many in the credit industry and you often get a sharp response: no way. Decisions that awarded punitive damages to debtors have received broad attention. Trying to collect on a bad loan is tough enough. Why compound the struggle by giving the debtor the […]


Sears Chapter 11 Rulings Threaten to Upend Administrative Claim Status for Goods Vendors

Application of Section 503(b)(1)(A) and 503(b)(9) in the Sears Chapter 11 Filing Precedent setting rulings in the Sears chapter 11 case could radically alter how vendors support companies who file for bankruptcy in the future. Historically the presumption and practice in the vast majority of bankruptcy cases has been that vendors receive priority status for […]


File Early and Often: Filing and Amending Claims in a Bankruptcy Case

A Primer for Those Holding Bankruptcy Claims Against a Debtor Bankruptcy claims do more than simply determine the amount of money a creditor is owed or can receive as a distribution. Claims also can generate clout. Clout enables a creditor to sit on a creditor committee, have more leverage in negotiations, and claim a higher-priority […]


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