Articles

Kenneth A Rosen addresses the challenges faced by unsecured creditors seeking recovery after Chapter 11 bankruptcy and expedited bulk-asset sales. It focuses on the dynamics of pursuing claims against directors and officers (D&O claims) and outlines protective measures for vulnerable directors. The corporate bankruptcy landscape, characterized by low Chapter 11 success rates and expedited sales, prompts unsecured creditors to explore alternative recovery sources. The evaluation of D&O claims involves scrutinizing factors like the business judgment rule, the board's role in insolvency, and the decision-making process. A properly functioning board, independent from management influence, is emphasized, with red flags including familial ties and lack of diversity. Recognizing signs of financial distress is crucial for directors, who are urged to fulfill fiduciary duties even toward creditors as insolvency approaches. The article advises directors to actively engage in finding solutions rather than resigning, as resignation may not absolve past actions from scrutiny. Ultimately, the article empowers directors and officers to protect themselves in the complex landscape of corporate restructuring by adhering to fiduciary duties and ensuring a well-functioning board.

The ongoing debate over bankruptcy venue reform has been reignited due to the surge in bankruptcy cases post-COVID-19. High-profile cases like Purdue Pharma, Mallinckrodt, Boy Scouts of America, and others filing in "magnet districts" have prompted discussions. The proposed Bankruptcy Venue Reform Act aims to limit filings to locations tied to the debtor's headquarters or assets, but critics argue it oversimplifies complex corporate structures. A proposed compromise suggests specific criteria for venue determination in certain cases. Striking a balance between transparency and the unique nature of bankruptcy cases is crucial as the reform debate continues.

This article guides companies facing financial challenges due to the pandemic on how to effectively request forbearance or loan modifications from lenders. Key points include maintaining up-to-date records, providing realistic financial projections, analyzing the pandemic's impact on operations, adjusting results to showcase pre-pandemic performance, transparently stating assumptions, implementing self-help measures, evaluating collateral, demonstrating principals' commitment, and emphasizing thoughtfulness and honesty in communication. The comprehensive approach aims to strengthen borrowers' cases, fostering constructive negotiations for relief.

When a debtor files for bankruptcy, the automatic stay goes into effect, protecting the debtor's assets from creditors' collection efforts. However, the question arises whether a creditor's mere retention of property already in their possession constitutes a violation of the automatic stay. The Supreme Court, in City of Chicago v. Futton, clarified that passive retention of property does not violate the stay. Nevertheless, creditors should exercise caution and avoid any affirmative actions that could be construed as an attempt to exercise control over the debtor's assets.

The world of DIP (debtor-in-possession) lending offers lucrative opportunities for those willing to venture into the complex realm of bankruptcy proceedings. DIP loans, designed to provide financial lifelines to distressed companies undergoing Chapter 11 reorganization, can yield substantial returns for lenders who carefully assess risks and exercise prudent risk management strategies.

The retail industry has witnessed a surge in Chapter 11 bankruptcy filings, presenting unique challenges for landlords and neighboring tenants. This article delves into the intricacies of retail bankruptcy cases and provides practical guidance for navigating these complex situations.

As the economy continues to face uncertainty, the number of distressed companies and bankrupt debtors seeking to unload assets is likely to increase. This presents a unique opportunity for savvy investors to acquire real estate at bargain prices. However, navigating the complexities of bankruptcy sales requires careful preparation, strategic planning, and a deep understanding of the legal and financial dynamics at play.

The article discusses the impact of the eviction moratorium on small landlords, who have been unable to collect rent from their tenants due to the Covid-19 pandemic. The article explains the legal and economic challenges faced by landlords, and offers some possible solutions, such as applying for mortgage relief, negotiating with tenants, and seeking legal advice. The article also warns of the potential consequences of the eviction moratorium for the housing market, such as reduced supply, increased prices, and lower quality. The article is based on data from the U.S. Census, the Federal Reserve Bank of Philadelphia, and the Treasury Department, as well as court rulings and expert opinions.

The article explores the possibility of unsecured creditors suing the directors and officers of a bankrupt company for breach of fiduciary duty, based on a recent court decision in the Nine West case. The article explains the legal and practical challenges that creditors face in pursuing such claims, such as the business judgment rule, the exculpation clauses, the releases and injunctions, and the distinction between direct and derivative claims. The article also highlights the implications of the Nine West decision for trade credit executives, who may have another option to recover their losses in Chapter 11 cases. The article is based on data from the U.S. Census, the Federal Reserve Bank of Philadelphia, and the Treasury Department, as well as court rulings and expert opinions.

The appointment of independent directors has become increasingly common in bankruptcy proceedings. However, concerns have arisen regarding the true independence of these directors. To address these concerns, the article proposes a set of enhanced disclosure requirements for independent directors. These requirements would require directors to disclose their relationships with the debtor, its professionals, and other parties involved in the bankruptcy case. The article also recommends that directors have the authority to appoint independent counsel and financial advisors. By implementing these enhanced disclosure requirements, bankruptcy courts and creditors can gain a clearer understanding of the true independence of directors and ensure that they are acting in the best interests of all stakeholders. In addition to the proposed disclosure requirements, the article also provides a number of additional insights and recommendations. These include: The need for greater scrutiny when evaluating director independence in bankruptcy cases. The importance of transparency in the bankruptcy process. The role of bankruptcy courts in ensuring that directors are acting in the best interests of all stakeholders. Overall, the article provides a valuable contribution to the discussion of director independence in bankruptcy cases. It raises important concerns about the potential for conflicts of interest and offers a number of practical recommendations for addressing these concerns.