Financial Advisors and Investment Banking

Approving Insider Compensation under § 503(c)(3): Court Discretion or Business-Judgement Standard?

The Bankruptcy Code strives to reach a balance between giving the debtor flexibility in making daily business decisions while at the same time limiting those activities which are deemed to be outside the ordinary course of business. [1] This limitation generally comes in the form of judicial oversight. Indeed, courts exercise varying degrees of scrutiny depending on the applicable Code provision.

Financial Advisors and Investment Banking July 2010

Time to Be Proactive

Over the past year, much has been written about the coming “wave” of debt maturities; to add to the drama, some call it a tidal wave and others a tsunami. Regardless of the label that one uses, there is no dispute that several trillion dollars of debt will be coming due in the next few years. Much of that debt will be refinanced in the ordinary course because the borrowers have good businesses and adequate collateral.

Bank Reserves: Is Enough Enough? What Bank Reserves Tell Us About Future Performance

With the stock market up by 18.9 percent through the end of November 2009 and “signs” of recovery on the horizon, financial institutions throughout the world continue their quarterly, if not monthly, chore of estimating loan loss reserves during the most challenging times in recent economic history. Estimating these reserves is analogous to determining the exact arrival time of a cross-country flight dealing with headwinds and thunderstorms.

Buying Distressed Companies: An Opportunity in a Down Market

Some potential buyers of distressed companies may be sitting on the sidelines, waiting for the economic cycle to shift to growth mode so they can return to acquisitions, but some of the most recognized names and most prized assets in the nation have landed in bankruptcy during 2009 due to liquidity constraints, too much leverage, operational issues, etc. While buyers are unable to obtain the leverage of previous years, the discounted valuations of companies in distress or near or in bankruptcy can set buyers up for profit-taking once the economy strengthens.

Key Considerations in Restructuring a Gaming Company

As the Great Recession wreaks havoc on the once recession-proof gaming industry, many gaming companies are struggling to survive. These companies are highly regulated, capital-intensive businesses with high fixed-cost structures. Personal income and consumer spending drive gaming revenues. For more than one year, both have been declining. Net revenues at gaming companies during the last year declined because of weak foot traffic and patrons reallocating their entertainment dollars.

Automobile Dealer Restructuring and Wind-down Issues

There are thousands of Chrysler and GM automobile dealerships around the country that are currently in the process of restructuring or winding down their businesses.  Additionally, we have been involved in and noticed a significant number of other foreign manufacturer automobile dealer restructurings.

The Rise of Receiverships

Professionals recognize that receiverships can provide a cost-effective and efficient way to liquidate failed businesses, and that receiverships can provide some bankruptcy benefits without the high cost or lengthy proceedings associated with bankruptcy cases. Receivership professional fees tend to be less than those incurred in a restructuring or liquidation under the Bankruptcy Code. Accordingly, and particularly since BAPCPA’s enactment, the number of receiverships has significantly increased.

Restructuring and Growth for the Biofuels Industry

The U.S. biofuels industry-both ethanol and biodiesel-are well into a full-scale restructuring. Many companies are sitting idle, struggling with limited cash, ceasing operations, evaluating restructuring options or selling assets. Few, if any, players are prospering in the current environment.

This article reviews the recent, short-lived building boom, surveys the current state of the industry, assesses how the industry ended up in this situation, outlines a rationale for future growth and maps out the road ahead.

Obama Foreclosure Prevention Plan Supports New Servicing Model: Some Suggested Improvements

At its core, the Obama administration's foreclosure prevention program makes mortgage servicing the lynchpin of a new process that looks to modify and refinance millions of delinquent and underwater mortgage loans. The administration is attempting to incentivize servicers to be both proactive in soliciting modifications and to collect sufficient verifiable information to reunderwrite a borrower's credit in order to modify the existing loan. The plan provides for an annual incentive payment to the mortgage servicer provided the modified loan remains current.