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.
Consider the following scenario: A financially struggling consumer borrows cash from a friend and deposits the cash into his bank account. He uses this cash to make a purchase at a retail store and later pays his friend back. Subsequently, he files for bankruptcy.
A Federal Rule of Bankruptcy Procedure 2004 examination is commonly referred to as a “fishing expedition”[1] into a debtor’s financial affairs. Debtors, trustees and creditors routinely use Rule 2004 exams to investigate an examinee’s financial affairs with very little interference by bankruptcy courts or discovery rule limitations.
Editor's Note - The Unsecured Trade Creditor's Committee recently hosted a committee call dealing with these same cases. To listen to the recording of this call, click here.
The Bankruptcy Code defines “claim” as a “right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured….”[1] Congress intended the “broadest possible” definition, and that the Code “contemplates
Over the last decade or so, the vast majority of chapter 11 cases not converted to chapter 7 have resulted in sales of the debtors' assets. The sales were accomplished either under § 363 of the Bankruptcy Code or pursuant to a liquidating chapter 11 plan.
In a recent decision arising out of the Lehman case, which has been characterized as the largest and most complex bankruptcy in history and saw professional fees and expenses exceed $1.8 billion, the U.S.
In seeking to protect rights in collateral during the course of a bankruptcy case, secured creditors should be aware of potential fraudulent transfer liability and its far-reaching effect on the ability to protect collateral.
