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Avoid Falling into the “Check-the-Box” Trap When Working On or Planning For a Reorganization
There are so many involved details and items turnaround professionals have to deal with when they are brought in to help reorganize a company. It is very tempting to fall into a false sense of security when you can just check off the “got it” box without delving into a detailed analysis of complicated issues. Insurance is one of those deeply involved areas where professionals should not take the easy way out.
The Future of Bankruptcy Venue Reform
On June 28, 2021, a bipartisan bill was presented in the U.S. House of Representatives to amend 28 U.S.C. § 1408, the bankruptcy venue statute. The Bankruptcy Venue Reform Act of 2021, H.R.
Facilitating a Consensual Plan: The Role of the Subchapter V Trustee
11 U.S.C. § 1183(b)(7) tells us that “[t]he trustee shall ... facilitate the development of a consensual plan of reorganization.” The Small Business Reorganization Act of 2019 (Public Law 116-54) established for the first time in chapter 11 a mandatory, but nonpossessory trustee — the “subchapter V trustee” — to keep an eye on small business reorganizations under the new subchapter V of chapter 11 of the Bankruptcy Code.
Wave of New Mass Litigation-Driven Bankruptcies May Test the Limits of Nonconsensual Third-Party Releases
Since the passage of the modern version of the Bankruptcy Code in 1978, chapter 11 has been used as a tool by debtors to address mass litigation liabilities. While there are certain limitations and exceptions, chapter 11 can be a preferred avenue to address mass litigation liabilities because (1) the automatic stay of § 362 of the Bankruptcy Code generally halts most pending litigation, (2) cases pending in different jurisdictions around the country potentially can be removed and consolidated in front of a single court for resolution pursuant to 28 U.S.C.
Dismissal of First SBRA Case Filed in West Virginia, In re BK Technologies Inc., Raises Issue of Whether an SBRA Debtor Must Be a Going Concern in Order to Invoke Chapter 11 Protection
On March 29, 2021, in In re BK Technologies Inc.,[1] newly appointed Chief Bankruptcy Judge McKay Mignault dismissed the first Small Business Reorganization Act (SBRA) case filed in West Virginia due to a lack of a realistic ability to reorganize and the debtor’s bad faith. One of the key issues in the case was whether the SBRA debtor could utilize the bankruptcy process to liquidate what little it had left even after it had already been shut down for months. In dismissing the case, the court ruled that it could not.
Keeping Main Street’s Lights On During the Pandemic: The Business Recovery Plan
Insolvency professionals have limited options to consider when counseling small business clients in financial distress who wish to continue operating their business. On the federal level, practitioners may choose to file a traditional chapter 11 reorganization or a small business bankruptcy under subchapter V.
Bankruptcy During the COVID-19 Pandemic: An Argument for Uniformity with Respect to the Reimbursement of Professional Fees and Expenses
It is now widely known that the novel coronavirus (COVID-19) pandemic changed society for a variety of industries, whom either have deteriorated significantly or now cease to exist. At the core of the pandemic’s repercussions are mortgage lenders and other related companies — arguably suffering some of the most significant harm among affected industries during an unprecedented period in global history. One such company is Stearns Holdings, LLC, which, along with six debtor affiliates (the debtors), filed for chapter 11 protection on July 9, 2019, in the U.S.