Fraudulent transfers and actions to avoid them are second nature to both debtor and creditor attorneys. Although the exact requirements may vary amongst state and federal laws, a typical example includes a debtor that transfers its interest in some form of property to another party with the actual intent to prevent a creditor from collecting against that property. However, as unique as the state itself, a previously seldom-used loophole to fraudulent transfer law in Texas has jumped to the forefront of restructuring strategy—the Texas Two Step.

Unless the owner of a limited liability company elects to be treated as a corporation for tax purposes, the IRS will treat a single-member LLC as a “disregarded entity” for tax purposes. As a disregarded entity, an LLC’s assets, liabilities, income and deductions are reported as belonging to the owner for tax purposes. Markell Co. v.

One valuable tool in formulating a successful exit from chapter 11 via a confirmed plan is the use of third-party releases. Such releases can take many forms, but the basic idea is that a non-debtor third party contributes property, usually cash, to the debtor or a trust created under the plan, with the cash to be distributed to unsecured claim holders, in exchange for a release of asserted or potential claims those claim holders may assert against the third party (often where there is co-liability with debtor).

The United States District Court for the District of Minnesota recently rejected a creditor’s argument that when a Chapter 11 case is converted to one under Chapter 7 and the estate is administratively insolvent 11 U.S.C. § 726(b) requires disgorgement of amounts approved and paid to Chapter 11 administrative claimants.

A recent case out of the Bankruptcy Court for the Eastern District of New York—Mendelsohn v. Roslyn, Dkt. No. 22, Adv. Proc. No. 8-20-08012-reg (Bankr. E.D.N.Y. June 21, 2021) (Grossman, J.)—imparts important lessons for pleading and proving fraudulent transfer claims.

As witnessed repeatedly from countless national news sources, bankruptcy bulletins and scholarly articles, bankruptcies within the retail and restaurant industries have been booming. Within Fredrikson & Byron’s national practice alone, landlord and lessor clients found themselves wrapped up in many of these national bankruptcy cases, including those for CEC Entertainment, Inc. (better known as Chuck E. Cheese), Pier 1 Imports, Inc., and Vitamin OldCo Holdings, Inc., (f/k/a GNC Holdings, Inc.), amongst many others.

For several decades, domestic international bankruptcy laws in many countries are becoming more similar – convergence – and have been changing from a liquidation model to a rescue model. In a liquidation model, the failing of the business is assumed to be the consequence of fraud and mismanagement, and early displacement of management, liquidation of assets under supervision, and distribution of the proceeds to creditors honors creditors rights and protects creditors from further loss.

In the days leading up to a Chapter 11 filing, companies seeking bankruptcy protection commonly ask whether they can continue to pay some of their vendors after the bankruptcy case is filed. On the flip side, in the days following a Chapter 11 filing, vendors whose customer recently filed a bankruptcy case have the same question – can we still get paid?

Numerous changes have been made to the Paycheck Protection Program (PPP) in recent months, primarily stemming from the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (Economic Aid Act) signed into law in December 2020 as part of the overall Consolidated Appropriations Act, 2021, and related administrative rules and guidance issued by the Small Business Administration (SBA). In this article, we address frequently asked questions and guidance regarding the initial PPP loans taken out by Borrowers (First Draw Loans).

As financial distress grows due to the pandemic, charitable organizations are faced with two immovable forces–increased demand from hard hit communities and decreased funding due to both the economic hardships facing many donors and the cancellation of most live fundraising events. The increased demand and decreased resources of many nonprofit and charitable organizations have caused such organizations to consider filing for chapter 11 protection.