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Executory Contracts and Unexpired Leases
Dealing with Corporate Distress 06: 4 Basic Chapter 11 Concepts to Know Before We Go any Further
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 […]
How to Assess 3 Potential Preference Action Defenses
Businesses Have Options for Defending a Preference Action. Here’s How to Build the Right Defense. Your company has just been served with a preference complaint. The complaint seeks to recover tens or hundreds of thousands of dollars even though your company has already taken a loss on the debtor’s accounts. Your initial response is anger […]
What Distressed Businesses and Their Counsel Should Know About the Consolidated Appropriations Act 2021 and Its Effect on the Bankruptcy Code
What is the Consolidated Appropriations Act? Congress passed the Consolidated Appropriations Act, 2021 on December 21, 2020, and President Trump signed the massive act into law six days later, when it became effective. The act includes several changes to title 11 of the United States Code, which is usually called the “Bankruptcy Code,” and most […]
The Importance of Liquidity in the Capital Structure of a Distressed Company
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 […]
Analyzing Executory Contracts: Can AI Save Us from The Contract Tsunami?
The Overlooked (Giant) Asset Class: Executory Contracts In today’s world, one of the most important sources of assets and liabilities for a debtor is its executory contracts. Companies that were once heavy with assets and employees now have a much lighter balance sheet accompanied by many more business agreements enabling (or causing) them to utilize […]
Potential Pitfalls and Opportunities in Healthcare Restructuring
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 […]
A Non-Debtor Perspective on Executory Contracts
A Non-Debtor’s Rights in the Treatment of Executory Contracts Among the most powerful and best known tools that the Bankruptcy Code provides a debtor is the ability to reject burdensome contracts or to assume (and potentially assign) valuable contracts. From the perspective of non-debtor counterparties to such contracts, it may seem that the […]
Force Majeure, MAC Clauses & COVID-19: A Court Speaks to Every Commercial Tenant in the United States
Why You Should Include a Force Majeure Clause in Lease Agreements The Northern District of Illinois delivered a victory last month for a tenant who could not operate its leased space as contemplated at the time it entered into the lease (and as it had been operating up until COVID-19), because continuing to […]
LLC Membership Interests in Chapter 11 – Can They be Sold Over Other Members’ Objections?
Interpretation Matters When a chapter 11 debtor holds a membership interest in an LLC, it may be permissible for them to sell their membership interest in the LLC, or even force the sale of the entire LLC, over the objections of one or more other members. Or not. At the crux of the debate in […]
When Your Tenant Files for Bankruptcy
What a Commercial Landlord Needs to Know When a commercial real estate tenant files a Chapter 11 bankruptcy case, the landlord is faced with unfamiliar issues. Although each case is unique due to its own facts and the rulings of the bankruptcy court, this article will provide a basic overview of issues facing a commercial […]