With a growing number of projects facing financial difficulty, the importance of maintaining leverage for securing payment is greater than ever. The project itself remains a prime security target for any contractor, subcontractor or supplier for assuring appropriate attention is given to their claims and that payment will be forthcoming in a timely and unencumbered manner. Some very recent developments in the lien realm emphasize the ongoing attention that is being given to lien statutes and the opportunity they provide for maximizing those considerations of security and leverage.
During the current economic downturn, a number of financially distressed franchisees either have filed or may file for bankruptcy protection to restructure their financial obligations. As a result, franchisors should familiarize themselves with some bankruptcy basics before they are confronted with the situation.
What Happens If One of Our Franchisees Declares Bankruptcy?
In Schwab v. Reilly, the United States Supreme Court recently reversed a decision from the 3rd Circuit Court of Appeals regarding the need for a bankruptcy trustee to lodge an objection to an exemption where the property is actually worth more than the amount claimed by the exemption. The Supreme Court took the opportunity in this case to also clarify its prior ruling in Taylor v.
On June 15th, the Second Circuit held that district courts may issue anti-litigation injunctions barring bankruptcy filings as part of their broad equitable powers in the context of an SEC receivership. SEC v. Byers. Reuters reported on the involuntary bankruptcy petitions filed by creditors which prompted the district court's anti-litigation order.
On June 14th, the First Circuit modified the bankruptcy court's $250,000 sanction award against a mortgage servicer who erroneously claimed to be the mortgage holder. The mortgage servicer did not deliberately or intentionally seek to mislead the bankruptcy court and its actions were not prejudicial. First Circuit therefore modified the award to $5,000. In re Jacalyn S. Nosek.
Merger and acquisition transactions frequently have included ongoing obligations of the parties to each other. In a recent decision by the Third Circuit Court of Appeals, a trademark licensee in a 1991 acquisition survived an effort by the bankrupt licensor to overturn the license. (In re: Exide Technologies, U.S. Third Circuit Court of Appeals, No. 08-1872 filed June 2, 2010) The case illustrates that the time in which agreements in a merger and acquisition transaction remain at issue can be longer than would be expected.
Masuda, Funai, Eifert & Mitchell routinely represents creditors in bankruptcy proceedings in order to protect their contractual and legal interests and rights to payment. The following is a list of some recent larger U.S. bankruptcy filings in various industries. To the extent you are a creditor to any of these debtors, or other entities which may have filed for bankruptcy protection, you as a creditor are entitled to certain protections under the Bankruptcy Code.
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What is an inherited IRA? It is the IRA a non-spouse beneficiary receives upon the death of the IRA holder. Unlike a spousal beneficiary, the non-spouse beneficiary must maintain an inherited IRA in the name of the decedent for the benefit of the beneficiary. What is at stake? When the beneficiary files for bankruptcy protection, are the assets of the inherited IRA part of the bankruptcy estate and available to pay claims of creditors? Or is the inherited IRA exempt from the bankruptcy estate and free from creditor claims? Recent court cases have differing answers.
As Dr. Seuss once famously wrote (Marvin K. Mooney, Will You Please Go Now), “THE TIME HAS COME, THE TIME IS NOW”. Good faith efforts to bargain with Chapter 9 of the Bankruptcy Code in the foreground must begin now if we want to emerge from this financial crisis.
In a recent decision in the Chapter 11 case of Project Orange Associates, LLC1, the court confronted an important issue that often arises in bankruptcy cases: whether the use of conflicts counsel is sufficient to permit court approval under section 327(a) of the Bankruptcy Code of a debtor’s choice for general bankruptcy counsel that also represents an important creditor of the debtor in unrelated matters. Here, the conflict involved the debtor's largest unsecured creditor and an essential supplier.