Category Archives: Bankruptcy
Types of Adversary Proceedings and How to Defend Against Them
In bankruptcy law, an adversary proceeding is filed to litigate a major issue that affects the debtors’ and creditors’ rights. It is typically lodged by a creditor objecting to some aspect of the debtor’s entitlement to debt discharge. The proceeding is in essence a lawsuit, commenced by the filing of a complaint and involving discovery, […]
Using a Special Purpose Entity to Protect IP Assets During Bankruptcy
Companies facing potential financial distress have strategies available to protect their valuable intellectual property. One of these involves transferring IP assets such as patents, trademarks and copyrights to a special purpose entity (SPE) while the company is still solvent. This can keep IP assets immune from creditors while allowing the parent company to defend against […]
When Can an Individual Debtor Opt for Subchapter V Reorganization?
Subchapter V of Chapter 11 of the U.S. Bankruptcy Code, introduced by the Small Business Reorganization Act of 2019, was primarily designed to simplify and expedite the bankruptcy process for small businesses. However, it’s important to note that not only businesses but also individual debtors can qualify for this streamlined reorganization process if they meet […]
Making Use of Rights Offerings in a Chapter 11 Bankruptcy
Rights offerings are a strategic tool that a company can use to facilitate its success in a Chapter 11 bankruptcy. It involves giving existing shareholders or creditors the opportunity to buy additional shares at a predetermined price, usually at a discount from the market price. The capital raised is primarily used to pay off secured […]
Major Changes to Chapter 11 Dollar Amounts Effective in 2025
There have been significant changes to the dollar amounts specified in the Bankruptcy Code, which affect Chapter 11 cases filed on or after April 1, 2025. These changes are part of the mandatory inflation adjustment to the Code that occurs every three years. This year’s adjustment is approximately 13.2 percent, a notable increase compared to […]
When Is a Structured Dismissal Appropriate in Chapter 11?
A structured dismissal of a Chapter 11 bankruptcy case is a court order that includes special provisions. Unlike a standard dismissal, which ends the case unconditionally, a structured dismissal resolves certain issues through agreements among the debtor, creditors and other stakeholders. It may call for distributing the debtor’s remaining funds in a manner considered fair […]
What Is Involved in a Prepackaged Chapter 11?
A prepackaged Chapter 11 bankruptcy is a form of financial restructuring used by companies that need debt relief but want to avoid the usually lengthy and costly Chapter 11 process. A “pre-pack” requires working out a reorganization plan with creditors and shareholders before filing a petition in court. The plan includes details on how debts […]
U.S. Corporate Bankruptcies Reached 14-year High in 2024
The year 2024 showed a marked increase in companies filing for bankruptcy protection, signaling a deepening crisis within the corporate sector. The first quarter of the year was particularly notable, with a total of 190 U.S. companies filing for Chapter 11 from January through March. That was higher than any first quarter since 2010, when […]
When Might a Court Remove a Subchapter V Debtor-in-Possession?
In a small business reorganization under Subchapter V of the U.S. Bankruptcy Code, the business owner is typically allowed to continue operating as a debtor-in-possession (DIP). This arrangement permits the owner to maintain control over the business under the auspices of the court-appointed trustee in order to facilitate the transition to financial solvency. However, there […]
Using Motions to Compel Turnover of Bankruptcy Estate Property
When a bankruptcy petition is filed, the debtor’s assets generally become a part of the bankruptcy estate. This means they are protected from creditors and to some extent may be kept by the debtor under recognized federal or state exemptions. However, some assets belonging to the estate may be in the possession of creditors or […]
