The COVID-19 pandemic has forced many hospitality professionals and their clients to confront bankruptcy, insolvency, and loan workout issues for the first time since the Great Recession. Chapter 11 presents a host of unique issues for hotels and other hospitality businesses. This article highlights a few key chapter 11 bankruptcy concepts for non-bankruptcy lawyers and other industry professionals to consider as they advise their distressed clients in the coronavirus environment.

The global COVID-19 pandemic has devastated the hospitality industry. Hotel occupancy rates have fallen greatly in many markets, with employee layoffs and property closures affecting even the largest and otherwise best performing hotels. It is uncertain when the industry will recover. Many hotel properties will require a chapter 11 bankruptcy case to successfully reorganize their debt obligations and operations and preserve the value of the business.

Introduction

South Korea’s Hanjin Shipping Co Ltd. filed for court receivership on Wednesday, August 31st in South Korea after losing the support of its banks, setting the stage for its assets to be frozen as West Coast ports deny access to its vessels. This recent development will have an immediate impact on a number of Buchalter’s clients, including manufacturers, retailers and asset based lenders.

Across the country, the COVID-19 pandemic has significantly impacted the justice system. In many State and Federal courts, jury trials have been suspended and court hearings are limited to only criminal and emergency civil matters. Yet the Bankruptcy Courts, given the unique role they play in times of financial distress, are largely open for business, relying on electronic filing and conducting hearings by teleconference.

Numerous published reports indicate that Barney’s (which previously filed for bankruptcy in 1996) has retained bankruptcy counsel and financial advisors in preparation for a potential bankruptcy filing which, according to some reports, may take place as early as July 2019.

In a consignment distribution model, a third party Warehouse (the consignee) takes possession of goods on behalf of a Vendor (the consignor) for sale to Customers.

Los Angeles Lawyer July/August 2018

BANKING, LENDING, AND INSOLVENCY RESTRICTIONS RELEGATE THE LEGITIMATE CANNABIS INDUSTRY IN CALIFORNIA TO AN ALL-CASH BUSINESS, VULNERABLE TO CRIME

Two 3rd Circuit courts issue recent decisions that significantly impact trade creditor claims in bankruptcy

FROM THE EDITOR

Vicki Dallas