The timing of a bankruptcy petition filing is often a carefully calculated decision that a debtor makes to obtain certain protections of the Bankruptcy Code, most notably, the automatic stay, in advance of a looming event. In many cases, a debtor may be close to tripping a covenant, missing a debt payment, or a creditor may be attempting to foreclose on the debtor’s assets. The debtor must be cognizant of the timing of these events as the protections of the Bankruptcy Code only apply after the petition has been filed.

As discussed in Part 1 and Part 2 of this series, any buyer of assets from a company in any degree of financial stress should be concerned about the transaction being attacked as a fraudulent transfer.

Ring v. First Niagara Bank, N.A. (In re Sterling United, Inc.), 519 B.R. 586 (Bankr. W.D.N.Y. 2014) –

A chapter 7 trustee sought to recover as preferences payments made by the debtor to a lender and proceeds of collateral liquidation received by the lender based on arguments regarding whether UCC financing statements adequately perfected the lender’s security interests.

Introduction

A prominent New York bankruptcy court is the latest in a series of courts to deny lenders the full benefit of their bargains when borrowers attempt to restructure debt through a chapter 11 reorganization. Continuing a trend that includes a 2013 decision from the Second Circuit in the American Airlines bankruptcy, the Fifth Circuit's 2014 decision in the case of Denver Merchandise Mart, and the New York federal district court's 2010 affirmance in the Calpine bankruptcy case, the bankruptcy court for the Southern District of New York has ruled, in In re MPM Silicones, LLC (Momen

Businesses with a global footprint require agile, sophisticated counsel possessing in-depth knowledge of the international aspects of bankruptcy and restructuring. The bankruptcy court 

Questions Standing of Indenture Trustees to Pursue Fraudulent Conveyance Claims

Any buyer of assets from a company in any degree of financial stress should be concerned about the transaction being attacked as a fraudulent transfer. Officers and directors of a selling entity also have concerns about this risk due to potential personal liability.

United States Bankruptcy Courts, particularly in New York and Delaware, are already a destination for multinational corporate bankruptcy filings, but a recent study co-authored by Stephen J. Lubben, a Seton Hall Law School professor and frequent contributor to The New York Times’ DealBook blog, suggests that the current volume of foreign debtors filing in the U.S.

“Life is not about perfect information. Life is about choices, which is why you have elections.”