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Claims Trading

How to read a balance sheet

Finding Truth in a Debtor’s Balance Sheet: Analyzing Assets, Liabilities and Equity

How to Read a Balance Sheet Beyond Surface Level   A balance sheet provides a snapshot of a company’s financial condition as of a specific date by presenting three components: assets, liabilities and equity.  While a balance sheet may help its user to evaluate a company for stability, investment potential, and creditworthiness, it should not […]


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 […]


Small waterfall

Investing in Bankruptcy Claims as a Cash Investment

Investing in bankruptcy claims can be very profitable or can result in a significant, or even total, loss. Bankruptcy claims are a creditor’s right to payment from a debtor. A bankruptcy claim can be secured by the debtor’s property or can be unsecured. Claims are classified in chapter 11 plans of reorganization according to their […]


What Happens in the BVI, Doesn’t Stay In The BVI – Clawbacks of Fraudulent Transfers

How Far Can the Trustee Reach? It is common practice that trustees will seek to recover or “clawback” fraudulent transfers made prior to the commencement of a Chapter 11 bankruptcy case. But what happens when all transfers by the debtor were fraudulent? And how far can the trustee reach to recover a transfer? Let’s look […]


Considerations When Selling a Bankruptcy Claim

One of your customers sends you notice it has filed for chapter 7 or chapter 11 bankruptcy protection rather than the payment for goods or services provided that you were expecting. You understand that you now have a “claim” against the “debtor,” in bankruptcy parlance. You are not quite sure you want to deal with […]


Unsecured Creditors Prevail Against the UCC-1

In the realm of lending, the perfected Uniform Commercial Code-1 (“UCC-1”) is the hallmark of security.  If a secured asset has value, and the liens are valid, what other issues are there to consider?  Well, in at least one instance, underlying intercompany notes were the issue.  And because of the nature of these notes, the […]


When Are Goods “Received by the Debtor” for a Section 503(b)(9) Claim?

Two important decisions by the Third Circuit Court of Appeals and the Delaware Bankruptcy Court shed light on goods in receipt of debtors in Section 503(b)(9) claims.


Dealing With Distress for Fun & Profit – Installment #17 – Overview of DIP Financing and Cash Collateral Motions

There is a seeming irony here in that a company that files for bankruptcy often does not have the cash to do so. That’s where DIP financing comes in.


An Introduction to Bankruptcy Claims Trading: Part 2

Documenting a Claims Trade In our previous article, Introduction to Bankruptcy Claims Trading, we discussed the claims trading marketplace, focusing on its characteristics, the motivations for its participants, some basics of documentation, key business and legal structuring considerations, as well as risks borne by sellers and purchasers in these types of transactions.  In this article, […]


Dealing With Distress for Fun & Profit – Installment #16 – Super and Residual Priorities

This series was started with a broad overview of business bankruptcy, but our last few installments have focused on: unsecured creditors the priority scheme in bankruptcy protecting/collecting your claim In this installment, we draw on our discussion of the priority scheme, with a special focus on super and residual priorities. As previously discussed, not all […]


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