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General Unsecured Creditor
Which Creditors Get Paid First? The Liquidation Order of (Absolute) Priority
What is the Hierarchy of Claims Under the Absolute Priority Rule? If you are a vendor, service provider, or another unsecured creditor to a chapter 11 debtor, you cannot be blamed for feeling like a duped lover after learning about the bankruptcy of your once devoted business companion. Despite the promises of “I’ll stand by […]
90 Second Lesson: Carve-Outs for Unsecured Creditors
How Does a Fee Carve-Out Relate to A Carve-Out for Unsecured Creditors? [Editor’s 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.] In a separate 90 Second Lesson, we defined and explained the […]
Dealing with Corporate Distress 02: These Are the People in Our Neighborhood: An Overview of Parties in Chapter 11
A Series on the ABCs of ABCs, Business Bankruptcy & Corporate Restructuring/Insolvency Since a judge presides over a chapter 11 proceeding, one might assume that a chapter 11 case is like any other commercial litigation matter, with one party on each side of the case: a plaintiff and a defendant. One would be wrong (Felix […]
Demystifying Administrative Expenses in Bankruptcy
Priority Claims in Chapter 11 Bankruptcy Bankruptcy professionals, other business professionals, and trade vendors would be reluctant to provide services or otherwise extend credit on an unsecured basis to an insolvent entity like a bankruptcy debtor, unless their claims to payment were somehow ensured. In addressing this predicament, Congress provided that holders of unsecured […]
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 […]
Opportunities in Bankruptcy: Turning Coal Into Diamonds
“The time to buy is when there’s blood in the streets.” – Baron Rothschild Don’t Panic, There Are Many Opportunities in Bankruptcy When a client or a competitor files for bankruptcy, it is natural to reflect on the downside. What’s going to happen to my outstanding receivable? Is the market primed for a downturn? How […]
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 […]
Dealing with Distress For Fun & Profit – Installment #14 – An Introduction to Chapter 11 for Unsecured Creditors: What Every Unsecured Creditor Should Know
A written tour of business bankruptcy and its alternatives. If you would like to read from the beginning, this series started here with a broad overview of business bankruptcy. Most recently, the series has focused on the automatic stay, where you can find the 30,000-foot view. Or you can find more specific treatment here, here and […]
Dealing With Distress For Fun & Profit – Installment #2 – Bankruptcy Parties
A written tour of business bankruptcy and its alternatives A typical commercial litigation case involves a judge, a plaintiff, and a defendant. A typical commercial bankruptcy case also has a judge, but that’s about where the similarities stop. A typical commercial litigation case, you see, is a two-party dispute. A typical commercial bankruptcy case is anything […]
What Else Can a Creditors Committee Do? Maybe Reap $1.5 Billion for Unsecured Creditors (Lender Beware)
JPMorgan Chase & Co. and others (“JPM”) lent $1.5 billion to General Motors Corporation (“Old GM”) under a term loan agreement (the “Term Loan Agreement”). JPM was the senior secured creditor of Old GM. Old Gm went into chapter 11 bankruptcy. Under the terms of the DIP financing approved by the bankruptcy court, proceeds of […]