For example, you make a commercial real estate loan and record your deed of trust. The borrower pays you for a time but then defaults. You tried loan forbearance and modification, but it was unsuccessful. The borrower falls...more
A hallmark of bankruptcy law is equal treatment of similarly-situated creditors. The Bankruptcy Code frowns upon a debtor who, while insolvent, pays some creditors but not others in the run-up to bankruptcy – whether...more
For a lender in bankruptcy, the best situation is to be an over-secured creditor, meaning the value of your collateral exceeds your debt. A creditor in this exalted category can recover principal, interest (including...more
On June 27, 2024, the United States Supreme Court decided the Purdue Pharma appeal.
In a five-to-four decision, the Supreme Court held that a bankruptcy court may not extend to non-debtors the benefits of a Chapter 11...more
7/9/2024
/ Appeals ,
Bankruptcy Code ,
Bankruptcy Court ,
Chapter 11 ,
Commercial Bankruptcy ,
Debtors ,
Non-Debtors ,
Opioid ,
Pharmaceutical Industry ,
Purdue Pharma ,
Third-Party Release Agrements
Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect four years ago, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors....more
For creditors, it can be difficult to navigate the financial difficulties of your customers. It seems like it would only get worse in bankruptcy, but that is not always the case. Subchapter V of Chapter 11 of the Bankruptcy...more
A recent decision by the North Carolina Business Court highlights the risks of interfering with property that is part of a receivership estate. The North Carolina Commercial Receivership Act celebrated its three-year...more
A recent decision from a bankruptcy court in Delaware provides a cautionary tale about the risks of involuntary bankruptcy. In the Delaware case, the debtor managed a group of investment funds. The business was all but...more
3/13/2024
/ Attorney's Fees ,
Automatic Stay ,
Bankruptcy Court ,
Chapter 7 ,
Commercial Bankruptcy ,
Damages ,
Debtors ,
Delaware ,
Involuntary Bankruptcy ,
Legal Costs ,
Willful Violations
In Chapter 11, value is king. Secured creditors have rights in proportion to the value of their collateral.
When a secured creditor and the debtor can't agree on value, appraisals and appraiser testimony become...more
Creditors know that a bankruptcy petition automatically halts efforts to collect pre-petition debts from the debtor outside of bankruptcy.
The "automatic stay" provides fundamental protection to debtors, mandating a full...more
As the townsfolk of Lubbock, Texas readied for the annual Fourth on Broadway Independence Day fireworks show and celebration, local car dealer Reagor-Dykes wanted to be front of mind. So as it had the previous year, it...more
Creditors know that when a debtor files bankruptcy, the "automatic stay" prohibits further collection activity to give a debtor breathing room to reorganize his affairs. If a creditor willfully violates the stay, it can be...more
If a business engages in bad behavior like intentional interference with contract and tortious interference with business relations, then it may not use Subchapter V of Chapter 11 to discharge debts based on that bad...more
In a welcome feat of bipartisanship, Congress passed a bill to restore the Subchapter V debt limit to $7.5 million, and President Biden signed it into law on June 21. ...more
Last year, we offered a lesson and a moral from a North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court.
The lesson from the case was that the bankruptcy court...more
Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect in February 2020, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors. Under the law as originally...more
In January, we wrote about the Purdue Pharma mega-bankruptcy. A United States District Court in New York vacated Purdue Pharma's confirmed Chapter 11 plan, holding it was improper for the plan to contain non-consensual...more
In Chapter 11, a business or individual seeks to confirm a plan of reorganization that – upon compliance -- will release it from liability for certain claims and obligations -
But what about parties other than the debtor?...more
For creditors dealing with debtors in the shadow of bankruptcy, a common scenario repeats itself.
The creditor repossesses collateral, attaches an account, or sets off a bank account, and then the debtor files a...more
This is a story about contempt and clarity -
It comes to us from a July 2021 North Carolina district court decision reversing a $115,000 sanctions order by a North Carolina bankruptcy court. The story offers a lesson and...more
Bankruptcy offers a temporary sanctuary for parties seeking relief from a variety of problems – financial crisis, lawsuits, collection actions, repossessions, foreclosure, and pandemics.
Filing bankruptcy before a money...more
Subchapter V of Chapter 11 of the Bankruptcy Code, which took effect in February 2020, creates a more streamlined and less expensive Chapter 11 reorganization path for small business debtors.
It has proven popular during...more
To be eligible for a Paycheck Protection Program ("PPP") loan, the applicant must certify on the borrower application that the applicant and any owner of 20% or more of the applicant are not “presently involved in any...more
We previously informed you that if you are a small business that needed to file bankruptcy to save your company, then you may be able to take advantage of Subchapter V of Chapter 11 of the Bankruptcy Code.
The new...more
The Consolidated Appropriations Act of 2021 ("CAA") took effect on December 27, 2020.
The mammoth spending and COVID-19 pandemic relief bill contains provisions related to commercial real estate leases in bankruptcy. ...more