The Tenth Circuit in Southwest Food Distributors, LLC, 561 F.3d 1106 (10th Cir. 2009), affirmed the denial of the proposed retention of “national” counsel by the committee of unsecured creditors. “While the right to select counsel of one’s own choice is an undeniable right afforded to participants in bankruptcy, that right is not without boundaries.
As several U.S. automakers teeter on the brink of collapse, the prospect of bankruptcy reorganization has become a present-day reality for two of the largest automakers in the U.S. Reorganization would involve plant closures, brand elimination, layoffs, union concessions, reduced dealer networks, asset sales and creditor compromise. What is perhaps less obvious is the part that this codependence will play between the domestic automakers and their suppliers in Detroit’s potential road to recovery.
The enactment of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) brought sweeping changes to the Bankruptcy Code, but perhaps none more important to most unsecured trade creditors than a single word changed in 11 U.S.C. §547(c)(2).
In an effort to protect suppliers who sell goods in the days leading up to a customer's bankruptcy, Congress has, via §503(b)(9) of the Bankruptcy Code, carved out special treatment for claims made by creditors who sell and deliver goods to a debtor during the 20 days before a debtor's filing.
Last June, the Supreme Court decided the case of Florida Department of Revenue v. Piccadilly Cafeterias Inc., which dealt with a disputed tax exemption on an asset sale. Section 1146(a) of the Bankruptcy Code provides a stamp-tax exemption for any asset transferred under a plan confirmed under chapter 11.
An emerging strategy many hedge and private equity funds are pursuing is known as the "loan to own" investment. In this type of investment, a fund's investors acquire debt, and sometimes certain amounts of equity or management control, such as voting power or board seats, from a lender of a distressed company.
Customers who don't pay are an unfortunate but inevitable reality of doing business. Some will tumble into bankruptcy; others will continue to operate and perpetuate the suppliers' risk of nonpayment. Usually in this environment, communication from the customer is substantially reduced, if not stopped. What can a supplier do to better evaluate this risk and act to minimize its potential loss?
Creditors are often surprised by how difficult it is to allow and issue payment on their proof(s) of claim.[1] Many creditors believe that it is very clear that they are owed money. Indeed, all correctly filed proofs of claim are prima facie allowed until the court determines otherwise. Even if there is an objection to the proof of claim, the debtor has to meet certain standards to overcome the claim’s prima facie validity.
One of the best kept secrets in the tooling industry is an Ohio law that grants a lien to molders and mold-builders for services performed related to dies, molds, patterns and forms. Ohio Molder’s Lien Law is provided in Ohio Revised Code §1333.29 through §1333.31 (Molder’s Lien Law), and the applicable provisions that outline Ohio Mold-builder’s Lien Law (Mold-builder’s Lien Law) are located in Ohio Revised Code §1333.32 through §1333.34.[2]
A bankruptcy judge in Texas has issued one of the most compelling preference rulings in recent history. In the chapter 7 case of Brook Mays Music Co. pending in Dallas, the court ordered at the outset of a chapter 7 case that the chapter 7 trustee NOT pursue certain preference actions in an effort to reel in “preference litigation run amok.” In making this ruling the court stated: