In general, a company has two bankruptcy alternatives: liquidation under Chapter 7 and reorganization under Chapter 11.
Under Chapter 7, upon the filing of a bankruptcy petition, a trustee is appointed to gather and sell all of the debtor’s assets as quickly as possible. Once the trustee liquidates all of the assets, it must pay creditors in accordance with the priority scheme mandated by the Bankruptcy Code:
In a depressed economy wrought with defaulting developers, a lender in California facing a lien priority challenge should evaluate whether it would be worthwhile to secure a first priority position for its deed of trust through law and motion practice.
A New York State Administrative Law Judge has denied an application for costs and fees filed by a petitioner who had succeeded in substantially reducing the asserted tax liability through settlement. Matter of Frank M. Grillo, DTA No. 823237 (N.Y.S. Div. of Tax App., Nov. 3, 2011). The decision turned on whether the position of the Department of Taxation and Finance was substantially justified, and that, in turn, depended upon whether the Department had used the correct address when it sent the Notice of Determination to the petitioner.
In today’s lending climate, confession of judgment provisions (“COJ Provisions”) have become a fact of life for the Virginia banker. Indeed, as troubled loans become more prevalent, a properly drafted COJ Provision can often be a creditor’s best friend. No longer can we afford to lump COJ Provisions into that fuzzy “boilerplate” category that we so easily gloss over. More and more bankers are coming to the realization that a COJ Provision is one of the most powerful tools a creditor can have against a defaulting debtor.
The U.S. Court of Appeals for the Second Circuit, on Dec. 2, 2011, ruled in favor of SRZ client Alfa, S.A.B. de C.V., denying Enron’s petition for rehearing in Enron Creditors Recovery Corp. v. Alfa, S.A.B. de C.V., 651 F.3d 329 (2d Cir. 2011). The court had previously ruled against Enron more than five months ago, holding that its redemptions of commercial paper were “settlement payments” and thus not voidable as preferential or fraudulent transfers under Bankruptcy Code § 546(e), one of the code’s so-called “safe harbor” provisions.
On September 7, 2011, the FDIC announced the launch of a new initiative aimed at encouraging small investors and asset managers to partner with larger investors to participate in the FDIC’s structured transaction sales of assets from failed institutions.
Pursuant to Section 113 of Dodd- Frank aimed at avoiding a repeat of the Lehman Brothers collapse in September 2008, the Federal Stability Oversight Council (“FSOC”) issued a proposed rule establishing a three-stage analysis for identifying non bank systemically important financial institutions.
Fallout from the Great Recession continues to figure prominently in world headlines, as governments around the globe struggle to implement or extend programs designed to jumpstart stalled economies and attempt to gauge the health of financial institutions deemed “too big to fail” or otherwise critical to long-term prospects for recovery.
Toledo solar firms First Solar Inc., Xunlight Corp., and Willard & Kelsey LLC are still confident their operations will survive despite predictions from the chief executive of China’s Trina Solar Ltd.
The powers and protections granted to a bankruptcy trustee or chapter 11 debtor in possession under the Bankruptcy Code are numerous and far-reaching.