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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: 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 […]
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 […]
Dealing With Distress for Fun & Profit – Installment #15 – Protecting Your Bankruptcy Claim
This series was started (click here to read from the beginning) with a broad overview of business bankruptcy but our last few installments have focused on unsecured creditors (click here to read about unsecured creditors) and the priority scheme in bankruptcy (click here for the 30,000-foot view or you can find more specific treatment here, here and here). In this […]
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 […]