Section 548(c) of the Bankruptcy Code provides a defense to a party found to have received a fraudulent transfer: If the transfer is received for value and in good faith, the transferee may retain the property to the extent value was given in exchange.[1]
The dissolution of a law firm can be a financial catastrophe for its partners. In a typical law firm dissolution, the partners lose any bonuses, end-of-year draws, and thousands or hundreds of thousands of dollars in capital. Adding insult to injury, if the firm’s creditors force it into bankruptcy, which often happens following law firm dissolutions, the partners can expect to be the targets of litigation.
[1]Over the last 30 years, dozens of notable U.S. law firms have dissolved or gone bankrupt. Although many of those firms were relatively small, others were among our country’s largest and most venerated.[2]
A law firm’s demise is often years in the making. But once circumstances become dire, a law firm’s collapse can happen swiftly. Sensing the end, equity partners, contract partners and laterals may leave individually or in groups, taking the most profitable business with them and accelerating a teetering firm’s death spiral.
Individual debtors have the right to retain and use pre-petition property to reorganize under chapter 11 without first getting creditors’ consent or proposing to pay them off — at least according to the Bankruptcy Code.[1] 11 U.S.C. § 1129(b)(2)(B)(ii) expressly spares individual chapter 11 debtors from the absolute priority r
Editor's Note: Reprinted with permission from the ABI Journal, Vol. XXXIII, No. 9, September 2014.
Partnership law and bankruptcy law are not strangers. Perhaps no greater proof can be found than in the recent battle over the unfinished-business claims of dissolved law firms, which pit a law firm’s bankruptcy estate against the lawyers that often served as the firm’s lifeblood prior to their bankruptcy filing.
When a business is in financial distress, the breaking point sometimes comes with little or no warning. An event such as a termination of funding, the falling through of a crucial transaction, or the loss of a key customer can be difficult to predict, and may result in a distressed business being forced to cease operations abruptly, without providing its workers with the advance notice required under the Federal WARN Act.[1]
In In re Emoral, Inc.,[1] the Third Circuit held that personal-injury causes of action arising from the alleged wrongful conduct of the debtor corporation, asserted against a third-party non-debtor corporation on a theory of successor liability under state law, were generalized claims constituting property of the bankruptcy es
Consider the following situation: A debtor owes you $1 million, and you find out that the debtor has transferred its assets to a third party without receiving reasonably equivalent value and is now unable to pay its debt to you.
Add the Western District of New York to those courts holding that in rem tax foreclosures are not presumed to provide reasonably equivalent value to a debtor. In Canandaigua Land Development LLC v. County of Ontario (In re Canandaigua Land Dev. LLC), 521 B.R. 457 (Bankr. W.D.N.Y.
The Bankruptcy Code generally restricts the trustee’s employment of professionals to those “that do not hold or represent an interest adverse to the estate, and that are disinterested.”[1] Broadly speaking, “disinterested” persons are those who do not have a pre-petition interest in or relationship with the debtor.
