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Insolvency
Corporate Attorney-Client Privilege is in the Hands of the Bankruptcy Trustee
When is Your Company’s Attorney-Client Communication No Longer a Secret? Imagine if every secret and strategy that you had ever shared with your attorney were laid open for the world to see. A trustee in a business bankruptcy case may well have the power to review, publish, and wield all of the debtor’s attorney-client […]
The Elegant Swan and Clumsy Duck: What is Recharacterization in Bankruptcy?
How the Recharacterization of Debt Impacts Creditors The line between a loan and an equity investment isn’t always clear. In these cases, those who represent unsecured creditors can impact the distribution on claims in the creditor’s favor. This is done through the recharacterization of debt. In bankruptcy, a debt claim has a higher priority […]
The Fisker Case: My Credit Bid Capped at the Amount I Paid for the Debt?
Should Secured Creditors and Buyers of Distressed Assets Worry About Facing Limits On Their Credit Bids? One way to purchase assets (including the assets of a business as a going concern) is to prevail at a foreclosure sale or a § 363 bankruptcy auction with a credit bid. The first step is to acquire […]
90 Second Lesson: What Is a Composition Agreement?
How a Composition Agreement Can Be an Alternative to Chapter 11 QUESTION: John B asks: What is a composition agreement? ANSWER: A composition agreement is an out-of-court contract between a debtor and multiple creditors providing for the reduction or delay in payment of amounts owed by the debtor to the creditors entering into the […]
The Good, the Bad, and the Ugly of Replacing a Debtor’s Management with a Chapter 11 Trustee
Which is Better: Debtor in Possession or Chapter 11 Trustee? The mere act of filing a chapter 11 bankruptcy petition significantly alters the relationship between a debtor and its creditors, yet, perhaps surprisingly, the filing does not automatically trigger removal of the very management team that led (or maybe drove) the debtor into bankruptcy in […]
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 […]
Dealing with Corporate Distress 03: Welcome to the Jungle: The Animals of the Corporate Restructuring Industry
The ABCs of ABCs, Business Bankruptcy, & Corporate Restructuring/Insolvency Who are you? Maybe your company needs to file chapter 11. Or one of your customers recently filed. Or maybe a competitor is in (or is rumored to be close to filing) chapter 11. Maybe you’re thinking about getting into the corporate restructuring industry yourself. Regardless […]
Fraud And Deceit in Bankruptcy Cases – Lessons from “The Clouds”
What Can An Ancient Greek Playwright Tell Us About Bankruptcy? Some of the best lessons on fraud and deceit in bankruptcy were written around 2,500 years ago. Yes, all the way back in 423 B.C., the Greek playwright Aristophanes offered his thoughts for posterity in his comic play “The Clouds,” which tells the story of […]
Dealing with Corporate Distress 01: Hello Darkness, Our Dear Friend
A Series on the ABCs of ABCs, Business Bankruptcy & Corporate Restructuring/Insolvency Greetings, dear reader: It seems you’re interested in learning how to deal with corporate distress, and we’re glad you’re here. But let’s first make sure you got on the right plane. Maybe you . . . Are a C-suite executive of a business […]
90 Second Lesson: Is Bankruptcy Needed if Creditors Will Just Agree to Take Less?
QUESTION: Murray D. emailed, recently: “I am a general corporate lawyer. One of my clients has been in business for 50 years. It has no bank debt but it owes its vendors about $2 million. He told me that most or all of his vendors are willing to work with him by writing some small […]