[1]A trustee for a bankrupt entity or a debtor has the power to bring an action to avoid and recover constructive or actual fraudulent transfers. Section 544(b) of the Bankruptcy Code specifically allows a trustee or debtor to step into the shoes of an actual creditor of the debtor, who could have avoided the transfer outside of bankruptcy using state law. The U.S. Court of Appeals for the Seventh Circuit recently analyzed a debtor’s power to bring a state law fraudulent-transfer action..
In certain situations, the sale of an operating entity as a going concern in a receivership proceeding is a viable alternative to seeking relief under the Bankruptcy Code. Receivership going-concern sales may be especially appropriate in complex situations where enterprise value is declining, but the company is not hopelessly insolvent.
Courts across the country have recently been confronted with disputes originating from the acquisition of distressed debt or loans by a party, and the subsequent chapter 11 bankruptcy case commenced by the debtor company.
The right to credit-bid is one of the most valuable rights afforded to secured creditors under the Bankruptcy Code. Credit-bidding is the process by which a secured creditor places a bid at a sale of the collateral to which its lien is attached, using the debt owed to it to offset the purchase price.[1] Section 363(k) of the Bankruptcy Code allows secured creditors to credit-bid when a debtor conducts a sale of assets outside the ordinary course of business.[2]
Collateral estoppel, or issue preclusion, is an important doctrine that protects parties from expensive and vexatious litigation where those parties have previously had a “full and fair opportunity to litigate” the issues.[1] Within the Third Circuit, “a court will bar re-litigation of an issue on collateral estoppel grounds when ‘(1)
Due to the increasing integration of the world’s economies, globalization is now a business reality, even for lower- and middle-market companies. Accordingly, it is becoming more commonplace for foreign debtors to initiate chapter 15 proceedings in the U.S. in connection with insolvency-type proceedings in their home countries.
By nearly any measure, the chapter 11 cases of Hawker Beechcraft and its affiliates (the debtors) were a significant success. The cases began as a standalone reorganization predicated upon a restructuring support agreement (RSA) among the debtors’ senior lenders and noteholders, which soon thereafter gained the support of the official creditors’ committee.
When making a commercial loan, financial institutions typically require commercial borrowers to provide additional security by obtaining personal guarantees for the repayment of the outstanding debt.
A borrower’s deposit accounts are attractive collateral for lenders. Deposit account funds are essentially cash, and if the lender maintains the account, then the lender can reach the funds without effort. A borrower’s bankruptcy, however, creates a dilemma for deposit account lienholders, and a recent case counsels lenders to obtain adequate protection before turning over deposit account funds to the bankruptcy estate.
A 30-year friendship and business association between Charles Pircher and Wren Alexander ultimately cost one of Alexander’s companies, Wren Alexander Investments, L.L.C. (Wren LLC), its interest in certain real property in Medina County, Texas (Medina Property).
