Tag Archives: bankruptcy
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 […]
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 […]
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 […]
How Equity Holders Can Protect Their Interests During Chapter 11
When a company files for Chapter 11 bankruptcy, its existing equity holders (such as shareholders) are typically at the bottom of the repayment hierarchy. In U.S. bankruptcy law, the order of claims is strictly observed: secured creditors are paid first, followed by unsecured creditors, and then, only if anything remains, equity holders receive payment. This […]
Using Exemptions in an Individual Chapter 11 Bankruptcy
Bankruptcy exemptions are legal protections that allow debtors to keep certain property out of the reach of creditors when seeking bankruptcy relief. While exemptions are most frequently associated with Chapter 7 (liquidation) and Chapter 13 (wage earner’s reorganization) cases, they are also relevant in Chapter 11 bankruptcies when the debtor is an individual, rather than […]
What Goes Into Planning a Chapter 11 Exit Strategy?
Exiting Chapter 11 bankruptcy can be a turning point for a distressed business, offering the opportunity to reset operations, restructure debt, and regain financial stability. To maximize the chances of success, a business must develop a carefully tailored exit strategy that aligns with its unique financial situation, business model, and relationships with creditors. Chapter 11 […]
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, […]
