TRANSACTIONAL
LITIGATION/CONTROVERSY
June 8, 2017
Bankruptcy Alert
Insolvency at Its Limits: What Management and Creditors of Insolvent LLCs and LPs Should Know About Fiduciary Duties Waivers and Standing, Inside and Outside of Bankruptcy
By Isley M. Gostin, Craig Goldblatt and George W. Shuster, Jr.
Even with all the development of the last 20 years, Brooklyn, the most populous of New York City’s five boroughs, now approaching 2.7 million residents, continues to attract strong interest from developers, each scouring the borough to see where value can be created. Development generates demand as new residents require new retail and amenity services and increasingly new office clusters for entrepreneurs freed from the Manhattan central business districts by technology and preferring to locate closer to where their employees live.
On May 25, at the request of the FTC and the State of Florida, a Southern District of Florida court issued a preliminary injunction order temporarily halting a debt relief operation that bilked millions of dollars from financially strapped consumers.
NNN 400 Capitol Center, LLC, a single asset real estate debtor, has filed a petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware. According to the Petition, the Debtor estimates its assets and liabilities to both be between $10MM – $50MM.
A recent decision by the Sixth Circuit Court of Appeals may have muddied the question of the impact of collateral rent assignments on a debtor’s ability to re-organize under chapter 11.
FirstRain, Inc., an enterprise software company headquartered in San Mateo, CA, has filed voluntary petition for relief under Chapter 11 in the Bankruptcy Court for the District of Delaware (Case No. 17-11249). FirstRain’s petition estimates both its assets and liabilities to be between $1 to $10 MM.
To anyone practicing bankruptcy law more than a month, the scenario of a lender secured by a lien against real property, as well as an assignment of rents (“AOR”) is pretty standard fare. Default on the debt occurs, threats (and counter threats) are tossed about, notices of foreclosure are filed (and perhaps receivership proceedings were begun), and the borrower files the inevitable bankruptcy proceeding where all is stayed to be dealt with under the watchful eye of the bankruptcy court.
Hogan Lovells partners Chris Donoho and Ron Silverman spoke to DebtWire Radio about current issues concerning cross-border restructurings. They addressed the factors that prompt foreign-based companies to avail themselves of the U.S. Bankruptcy Code in lieu of local insolvency proceedings. They also talked about the hurdles that such companies must overcome to secure a U.S. court’s administration of their Chapter 11 cases.
How does U.S. Chapter 11 law differ from other foreign insolvency regimes around the world?
Ignite Restaurant Group (“Ignite”) filed a voluntary petition for Chapter 11 bankruptcy protection in the Southern District of Texas, Houston Division today (Case no. 17-33550). Ignite operates 137 Joe’s Crab Shack and Brick House Tavern + Tap restaurants, including three international franchise locations in Dubai. Ignite employs 8,400 people, including 2,900 full-time (both salaried and hourly) employees. Ignite’s bankruptcy schedules list $197 million in liabilities and $153 million in assets.