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Secured Claims
90 Second Lesson: Can my borrower file for bankruptcy just to keep me from foreclosing?
QUESTION: An exasperated loan officer emailed us, asking whether the borrower – a commercial real estate lessor – could really file a chapter 11 case just to evade a state court order to appoint a receiver in a foreclosure proceeding against the borrower’s building. ANSWER: If a debtor were to admit that it filed […]
90 Second Lesson: Secured Creditors and Toll Charges
QUESTION: An investment banker recently wrote in, saying this: “I am currently helping a troubled company sell itself. The proposed buyer wants to buy its assets through a 363 sale in Chapter 11 and is offering to pay the full amount the bank is owed on its secured debt. The bank is pushing back, trying […]
90 Second Lesson: What is a “UCC Article 9” Sale?
QUESTION: Jack B. emailed, asking, “Please explain what an Article 9 sale is. My lawyer said that if I give a security interest to a lender, it can do an Article 9 sale. What is an Article 9 sale?” ANSWER: Well, Jack, Article 9 of the Uniform Commercial Code governs the relationship between a […]
What do Secured Lenders Want? The Basics of Loan Forbearance Agreements
When a borrower defaults on its loan agreements,[i] a lender may, among other options, sue to foreclose on its collateral and collect from the borrower. The lender, however, may instead agree to amend the loan documents or enter into a loan forbearance agreement. If the borrower can convince the lender that, within a reasonably short […]
When Your Borrower Files for Bankruptcy (DIP Financing, Cash Collateral, and Adequate Protection)
What you need to know as a secured lender to a borrower who goes into bankruptcy you should know already, well in advance. If your borrower’s bankruptcy filing has taken you by surprise, please refer to my next article in this series, in which I will discuss the tactics and strategies in the contested case […]
Absolute Priority Rule in Bankruptcy: Are You Atop the List?
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 that “I’ll stand by you if you stand by me,” all those outstanding invoices won’t […]
A Creditors’ Guide for Claims Against Bankrupt Customers: Getting Claims Paid and Preventing Claw-Back of Payments Received
You recently shipped goods to a U.S. customer on credit. Now the customer is insolvent and evidently sliding into bankruptcy. As in baseball, at the close of the slide, the customer may be safe, continuing in business or sold as a going concern, or out, and facing liquidation. What to do? Included among the concerns […]
Limiting Credit Bidding “For Cause” After In re Aeropostale
Section 363(k) of the Bankruptcy Code (the “Code”) allows a secured creditor to bid at a section 363 sale and use the amount of their claim to offset the purchase price at the sale, called “credit bidding.”[2] A court may limit this right “for cause.”[3] The “for cause” standard is not defined in the Code […]
90 Second Lesson: Credit Bidding in Plan Sales
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: A private equity investor wrote in recently asking us to address credit bidding in the aftermath of Radlax. ANSWER: Thanks to the 2012 […]
Dealing With Distress For Fun & Profit – Installment #9 – Secured Creditors & Chapter 11
A written tour of business bankruptcy and its alternatives Our prior installment discussed some of the basic things a secured creditor needs to know about Chapter 11. The automatic stay was one of them. But, since we like to keep these things short (on the presumption that others also have short attention spans) we didn’t […]