Tag Archives: bankruptcy
How to Protect Personal Assets During a Small Business Bankruptcy
Despite their best efforts, small business owners may be pushed into insolvency by economic downturns, unexpected events. They can seek relief under bankruptcy laws, including Subchapter V of Chapter 11, which provides a streamlined process for seeking debt protection and restructuring. The owner of a closely held business facing the prospect of bankruptcy may worry […]
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 […]
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 […]
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 […]
