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Protecting, Monetizing and Leveraging IP Assets During Chapter 11
When a company enters Chapter 11 bankruptcy, it faces a critical juncture, one in which the primary goal is to obtain debt relief. The remedy also offers a chance to reorganize operations, improve its balance sheet and emerge as a stronger entity. Among a business’s greatest assets is its intellectual property (IP). Whether consisting of […]
How the Automatic Stay Works in Chapter 11 Cases
The automatic stay is a powerful tool for a business seeking Chapter 11 protection. It takes effect the moment the petition is filed and functions as a court-ordered injunction that bars most creditors from continuing or starting collection activities against the debtor or the debtor’s assets. That means prepetition lawsuits, garnishments, foreclosures, repossessions, repossession threats, […]
Prepackaged vs. Traditional Chapter 11 — Which Is Right for You?
For distressed companies seeking a path to financial stability, Chapter 11 bankruptcy is a powerful tool, offering the possibility of reorganizing debts while continuing operations. However, not all Chapter 11 filings are created equal. Business owners considering this relief must choose between two primary options: traditional Chapter 11 and prepackaged Chapter 11. Traditional Chapter 11 […]
How Chapter 11 Can Help Save a Failing Franchise
Franchise businesses, especially in industries like food service, hospitality and retail, often face heightened financial pressures. These can be due to high overhead — such as lease payments, royalty and advertising fees, payroll and inventory — combined with evolving consumer tastes, disruptive economic trends and internet business, which has shifted how customers interact with brands. […]
Business Bankruptcies Surge to Highest Level Since 2010
The U.S. economy is seeing an unprecedented rise in bankruptcy filings not experienced since the aftermath of the Great Recession in 2010. A confluence of rising operational costs, fierce competition from international companies and the relentless march of online commerce has left many companies, particularly consumer-facing ones, struggling to stay afloat. The Administrative Office of […]
Making Optimal Use of California Exemptions in Bankruptcy
When filing for bankruptcy in California, you can shield a good amount of your assets from creditors by employing exemptions provided by state or federal law. California offers two distinct exemption sets: System 1 (under California Code of Civil Procedure §704) and System 2 (under California Code of Civil Procedure §703.140). You must choose one […]
Structuring a Chapter 11 Plan for Long-Term Viability
Crafting a successful Chapter 11 plan goes far beyond simply reducing a company’s debt. It requires a deep, strategic overhaul of the business’s financial and operational structure. The goal is to create a resilient enterprise that returns to solvency and can thrive for years to come. Here are some strategies for structuring the Chapter 11 […]
High Court Ruling Curtails Use of Third-Party Releases in Chapter 11
The U.S. Supreme Court’s decision in what is known as the Sackler Discharge case has fundamentally altered how companies and their equity owners use Chapter 11 bankruptcy to resolve large-scale liability. The court definitively rejected the use of non-consensual third-party releases for equity holders or affiliates who are not themselves seeking a discharge through bankruptcy. […]
Rite Aid’s Demise Shows the Pitfalls of Exit Financing in Chapter 11
Exit financing is a new loan or credit facility that a company secures as it prepares to emerge from Chapter 11 bankruptcy. It can be a useful component of a successful reorganization plan, helping to provide a foundation for the company’s post-bankruptcy future. However, as demonstrated by national pharmacy chain Rite Aid’s recently announced second […]
How Becoming a Debtor in Possession Changes a Business Owner’s Role
Chapter 11 bankruptcy is a remedy designed to help a distressed business gain debt relief, reorganize and return to solvency. A defining feature of Chapter 11 is that the existing equity owner often remains in control of the company as a “debtor in possession” (DIP). However, an important transformation occurs. The business owner’s role shifts […]
