Factoring transactions, in which a buyer purchases outright or acquires an interest in a seller’s accounts receivable, are becoming increasingly common. Initially, the buyer must determine whether the transaction is to be recourse or non-recourse to the seller. In other words, can the buyer seek a remedy against the seller if the receivable is bad, or doesn’t pay, or does the buyer bear the entire credit risk of the deal, irrespective of whether the receivable is good? Both recourse and non-recourse transactions raise a handful of interesting considerations in bankruptcy situations.
Prime Minister Narendra Modi, elected in May 2014, will turn the corner again in May 2019 as he completes his first five year term. We visit some of the recent developments in his government’s legal and tax policies that have potentially mended a broken administrative process from the previous administration.
No one can yet predict the overall effect the COVID-19 pandemic will have on the economy in the long run. However, the immediate impact on small businesses seems readily apparent. The dramatic disruption has impeded cash flow and upset daily operations to the point that some business owners question whether recovery is possible.
Should a business find themselves in that unfortunate position, there is relief available under Chapter 11 of the Bankruptcy Code, but the Chapter 11 process can be unwieldy and expensive for small or even medium-sized businesses.
Perhaps one thing we can agree on in discussing the healthcare industry: it is in a state of distress stemming from the challenges created by an ever-increasing regulatory burden, changes in reimbursement rates, uncertainty with the Affordable Care Act, mounting tort and employment litigation. The recent rampant growth of urgent care centers and retail clinics as well as technological advances and telemedicine have created a change in the manner in which healthcare services are delivered and consequently put pressure on providers to compete.
If you are a licensee under a trademark license, what happens to your license if the licensor winds up in the Bankruptcy Court? A recent United States Circuit Court case demonstrates how uncertain the answer is at this time.
Some bankruptcy basics
Section 503(b)(9) of the Bankruptcy Code (11 U.S.C. §503(b)(9)) provides a special administrative priority claim for someone that supplies goods to a debtor in the 20 day period before the bankruptcy filing, but is unpaid as of the date of the filing. This is a meaningful priority. Administrative priority claims, which are on par with the claims of other post-petition service providers, like the debtor’s professionals, must be paid in full at the time of the confirmation of a plan, in order for a plan to be confirmed.
The Nevada Legislature has amended the state’s consumer reporting laws to remove restrictions on the information a credit reporting agency may report to gaming operators. With the passage of Senate Bill 409, a credit reporting agency is no longer prohibited from reporting to gaming licensees information about a job applicant regarding bankruptcies older than ten years, other civil judgments older than seven years, and criminal convictions older than seven years.
The IRS issued a Memorandum on April 15, 2016 clarifying the treatment of nonrecourse debt subject to certain “bad boy” guarantees. The Memorandum takes a position contrary to the recent Chief Counsel Advice (CCA 201606027) and is more in keeping with the general view of the real estate industry.
A little over a year ago, I authored an article addressing the question of whether the “Absolute Priority Rule” applied to Chapter 11 bankruptcy cases filed by an individual. That article, which focused on the decision of the Fourth Circuit Court of Appeals in In re Maharaj 681 F. 3d 558 (4th Cir. 2012), noted that the trend appeared to be towards the conclusion that the Absolute Priority Rule did apply in such cases—but that in Michigan, the issue had not yet been addressed by the Sixth Circuit Court of Appeals. That has now changed.