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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 […]
What Are the Chief Causes of Business Bankruptcies?
A significant risk for companies of all sizes and industries is that economic circumstances, some outside their control, will force them into insolvency. Such risks become more apparent as market forces and regulatory actions both home and abroad can affect a company’s prospects. Understanding the most common reasons for business bankruptcy can provide valuable insight […]
With Car Repossessions on the Rise, Chapter 13 Protection Can Be Vital
The U.S. is witnessing a drastic surge in vehicle repossessions, with rates reaching levels unseen since the aftermath of the 2008 financial crisis. Repossessions in 2024 were up 23 percent compared to the prior year, which is also 14 percent higher than the 2019 pre-pandemic levels. As purchase prices and borrowing costs have risen substantially, […]
The Perils of Selling Customer Personal Data During Chapter 11
A distressed company enters into Chapter 11 bankruptcy seeking to reorganize its debts, streamline operations and satisfy creditors so as to emerge solvent. Sale of assets is one method of raising capital to succeed in this venture. Among the assets that may be evaluated for sale are digital resources, including databases containing customers’ personal information […]
Employment Considerations in Filing a Chapter 11
When a company files for bankruptcy under Chapter 11, its employees often face a turbulent and uncertain environment. The process of reorganization introduces a host of employment-related issues, and the choices made by the company’s leadership can have a significant impact on staff morale, productivity, and retention. The news of a bankruptcy filing is unsettling […]
