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Insolvency
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 […]
90 Second Lesson: What will your lender do if you default on a commercial loan?
QUESTION: Scott T, emailed, asking, “I have a client who owns a few income-producing properties and she thinks she may not be able to make her next mortgage payments to her lender. What should I tell her to expect?” ANSWER: Once a loan default occurs or is looming, a proactive mortgage lender should be expected […]
When a Seller of Real Property Files for Bankruptcy Before Closing
What are the purchaser’s rights under an executory contract? Sven, of St. Paul, related to us this sad but musical tale, which pertains to purchasing real estate where the seller goes bankrupt before closing: You see, she and I entered into a written contract to buy a piece of land with a small house on […]
90 Second Lesson: What is a “composition agreement?”
QUESTION: Jack B. wrote in the other day, asking us to explain what a composition agreement is. ANSWER: A composition agreement is a 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 composition. Entering into a […]
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 […]
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 […]