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Insolvency
90 Second Lesson: I’ve been asked to sign an involuntary bankruptcy petition. Should I?
QUESTION: The credit manager of an Akron-based company wrote, asking this: “One of our commercial accounts is pretty far behind in paying on our invoices. Another vendor approached me and asked me to join in signing an involuntary bankruptcy petition. Is there any legal risk in doing this? ANSWER: In a word, yes. If an […]
A Chapter 11 Debtor Need Not Be Broke
A Solvent Debtor Is Not an Oxymoron Suppose that your borrower or customer files a chapter 11 case.[i] You do not like this because you’ll almost certainly not collect the full amount owed to you and to get anything you’ll have to get involved with a bankruptcy case and hire attorneys. Your discontent becomes fury […]
90 Second Lesson: How to assess whether a distressed business can be turned around?
QUESTION: Bill H., a business consultant in NYC, asks, how do I determine if a business I am being asked to help is just too far gone to save? ANSWER: Bill, if you have to ask this question, you might be doing your client a service by finding someone else who knows the answer already. […]
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 […]
When Your IP Licensor Files for Bankruptcy
How to Protect Your IP License Rights In 1888 – yes 1888 – Kodak coined the slogan: “You press the button, we do the rest.” The company, which was immortalized in Paul Simon’s song “Kodachrome1”, sold its assets – at apparent fire-sale prices – in bankruptcy court in New York. The Kodak case brought into […]
Cash is King – The Importance of Liquidity in a Distressed Company’s Capital Structure
A company’s “capital structure” is the array of its liabilities and equity. Capital structure commonly consists of three main components: working capital (or operating debt), financing debt, and equity.
A Primer on the Chief Restructuring Officer (CRO)
A Brief History of the Chief Restructuring Officer The role of a Chief Restructuring Officer (“CRO”) is approximately four decades old. While still a somewhat new role in the 1990s, CROs are now ubiquitous in the restructuring community. Todd Zywicki, a George Mason law professor who specializes in bankruptcy law, traces the origin of the […]
90 Second Lesson: Personal Liability for Unpaid Taxes in Insolvency Cases
Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it. QUESTION: Who can be liable for a chapter 11 debtor’s unpaid taxes? ANSWER: One or more persons, including a fiduciary, may be subject to […]
90 Second Lesson: Application of Federal Tax Laws in Insolvency Cases
Editors’ Note: this is part of our irregular series in which we answer readers’ questions. If you have a question, submit it to info@dailydac.com and we will try to answer it. QUESTION: Are insolvent or bankruptcy debtors exempt from federal income tax laws? ANSWER: In general, neither the Internal Revenue Code nor the Bankruptcy Code […]
Wave of Restaurant Bankruptcies Could Signal Coming Recession
There have been 10 restaurant company bankruptcy filings since November 2015. These companies, with approximately 1,000 combined locations, showcase the difficult operating realities of restaurant chains and could be a leading indicator of a general decline in economic conditions. Recent Restaurant Bankruptcies Opportunities and Challenges In recent years restaurant operators received increasing interest from private equity […]