Author Archives: Michael J. Berger
How Restaurants Can Use Chapter 11 to Renegotiate Leases
Restaurants are particularly prone to earnings downturns, which together with high rent and other obligations can push them to the brink. Chapter 11 is designed to help businesses continue operating while restructuring their debt and expenses. One of its most valuable features is giving owners a remedy for a lease or other rental agreement that […]
Strategic Use of a Single Asset Real Estate (SARE) Chapter 11
A Single Asset Real Estate (SARE) Chapter 11 is a remedy by which certain distressed property owners can stop foreclosure and pursue refinancing or other solutions. A debtor is generally classified as a SARE when substantially all of its income is generated by a single real estate asset and it does not conduct any other […]
How Medical Practices Can Use Chapter 11 to Survive Cash Shortfalls
Medical practices can fall into financial straits despite having a steady stream of patients. Cash flow can be strained by high payroll expenses, increasing malpractice insurance premiums, constantly delayed insurance reimbursements and the need to buy or lease expensive equipment. Unexpected cost overruns can quickly erode a practice’s profitability, particularly when reimbursement rates fail to […]
How First-Day Motions Can Be Integral to a Successful Chapter 11
First-day motions are expedited requests filed at the outset of a Chapter 11 case to address immediate operational needs. Their purpose is to stabilize the business, maintain continuity and preserve the value of the estate during the critical early stages of the bankruptcy process. First-day motions — so named because they are typically heard within […]
The Role of the Creditors’ Committee in Chapter 11 Cases
A creditors’ committee is a central feature of a Chapter 11 bankruptcy case. It is a group of unsecured creditors charged with protecting the interests of all unsecured creditors, whose claims may be reduced or discharged under the reorganization plan. The committee serves as a safeguard, providing oversight of a debtor in possession and helping […]
How Retailers in Chapter 11 Can Exit or Assign Costly Store Leases
Commercial leases are often among the most pressing financial obligations for retailers facing economic distress. Leases can run from three to 10 years, making them a significant financial liability when a sales location no longer generates enough revenue to cover rent and operating costs. Percentage rent clauses and co-tenancy requirements can further keep retailers tied […]
Preference Actions in Chapter 11: How to Defend Against Them
A preference in a Chapter 11 bankruptcy is generally defined as a debtor’s pre-filing transfer of property that unfairly favors one creditor over others. The bankruptcy code authorizes the trustee to bring an action to “claw back” the transfer and bring the property back into the bankruptcy estate. The purpose of a preference action, as […]
When Is a Trustee Appointed in Place of a Debtor in Possession?
During a Chapter 11 bankruptcy proceeding, company leaders usually can expect to remain in control as debtors in possession, which allows them to oversee the restructuring process and continue business operations. Appointing a Chapter 11 trustee is an exception to the usual practice and typically arises when there are serious concerns about the debtor in […]
When Can a Company File a Chapter 22 Bankruptcy Case?
Chapter 11 bankruptcy cases focus on relieving a company’s debt and restoring solvency. A Chapter 11 plan allows the company to continue operating while under protection from creditors, to renegotiate contracts and leases, to sell off nonprofitable assets, to restructure debt and payment obligations and to obtain new financing. A successful Chapter 11 lets the […]
How to Meet Subchapter V’s Engaged-in-Business Requirement
Subchapter V, created by the Small Business Reorganization Act of 2019, is a streamlined remedy designed for small businesses to reorganize faster and less expensively than in a traditional Chapter 11 proceeding. Businesses that qualify can obtain protection from creditors and restructure debt based on a self-created plan within the course of three or five […]
