A June 2018 Bankruptcy Court decision in the Southern District of New York (SDNY) held that foreign companies with no presence in the U.S. were subject to default judgments.

Companies sell goods or provide services to customers usually on two bases: (1) purchase orders and invoices with references to terms and conditions, or (2) a written sales or supply agreement.

Innovation and creativity are essential for competitive advantage and success in a global economy. The attendant intellectual property assets are the product of substantial capital investment, and companies should carefully manage risks associated with such assets. 

Preference Claims: Elements: A preference is a transfer of property of a bankruptcy debtor that (1) was to or for the benefit of a creditor; (2) was on account of an antecedent debt; (3) was made while the debtor was insolvent; (4) was made within 90 days of the filing of the bankruptcy petition; and (5) allowed the creditor to receive more than the creditor would receive if the payment had not been made but the creditor receives what it would receive in a liquidation of the debtor.

In the Chapter 15 proceeding of Energy Coal S.p.A., the Delaware Bankruptcy Court required a U.S. creditor to recover its claim in Italy.

Companies expend substantial resources managing the credit risk of customers, to protect the value of their sales. Many companies, however, do not always apply credit risk analysis to its supply chain, focusing instead on procurement at the lowest cost, and compliance with a myriad of regulatory issues. However, credit risk in the supply chain may actually pose a greater potential risk of loss. If a supplier fails to deliver product on time, the manufacturing process can be interrupted or halted, potentially idling plants at a significant daily cost to the company.

Preference Claims:

Creditors need to know of significant changes about to occur to the Federal Rules of Bankruptcy Procedure ("Bankruptcy Rules"). On December 1, 2017, certain amendments to the Bankruptcy Rules will become effective. This article discusses two of the changes: 1) the period for filing proofs of claim is being shortened, and 2) secured creditors must timely file a claim to receive a distribution.

Debtors in Chapter 11 proceedings rarely pay unsecured creditors a meaningful dividend on prepetition accounts receivable balances, much less pay them in full. In an era of aggressive lending to place capital in the market, loan to value ratios are high. When a company experiences financial distress or insolvency, unsecured creditors may be “out of the money” from the get-go.

Is a personal guaranty a separate agreement from the underlying contract it guarantees? The North Carolina Court of Appeals recently considered this issue inFriday Investments, LLC v. Bally Total Fitness of the Mid-Atlantic, Inc., 2017 WL 3254773 (N.C. Ct. App., Aug. 1, 2017). The case was decided by a 2-1 decision, with Judge Tyson delivering the opinion of the Court and Judge Elmore dissenting by a separate opinion.