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Involuntary Bankruptcy
Ponzi Scheme Lender May Be Off The Hook, After All: A Case Study
The Sixth Circuit would quote Ohio case law to explain that “A contract of novation is created where a previous valid obligation is extinguished by a new valid contract, with the consent of all the parties, and based on valid consideration.” In a sense, a novation establishes that the prior contract is fully performed by the novated contract.
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: Receivership vs Bankruptcy
The Benefits and Downsides of the Receivership Process [Editors’ 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.] QUESTION: Do secured creditors benefit more from a debtor’s bankruptcy or federal court receivership? ANSWER: […]
90 Second Lesson: I’ve Been Asked to Sign an Involuntary Bankruptcy Petition. Should I?
The Advantages and Disadvantages of an Involuntary Petition QUESTION: The credit manager of an Akron-based company asks: “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?” […]
Getting Over the Scariness of Filing an Involuntary Bankruptcy Petition
The Notorious Case of the Involuntary Bankruptcy Mention involuntary bankruptcy to many in the credit industry and you often get a sharp response: no way. Decisions that awarded punitive damages to debtors have received broad attention. Trying to collect on a bad loan is tough enough. Why compound the struggle by giving the debtor the […]
Mega RV: Unsecured Creditors Fall Short in Bankruptcy Settlement
An Unfortunate Case for Unsecured Creditors A settlement agreement in the Mega RV Corp. bankruptcy highlighted the interplay between an overzealous lender and a repentant business owner who came together to cooperate and provide a windfall recovery to unsecured creditors. Ultimately, through the machinations of the bankruptcy case, the settlement proved to be insufficient to […]