Articles & Media

The article underscores the pivotal role of valuation in financial restructuring, emphasizing its impact on creditor recovery, financing, and the delicate balance with secured creditors. It highlights the complexity introduced by uncertainties, particularly macroeconomic factors, in predicting cash flows generated by financial assets. The challenge lies in convincing courts, faced with skepticism, to consider these factors in bankruptcy valuations. Notably, the article addresses the unique considerations posed by the COVID-19 pandemic, advocating for a separate evaluation of macroeconomic factors. It urges a nuanced approach to adjustments, cautioning against arbitrary add-ons and emphasizing the need for thorough analyses. Ultimately, the goal is to foster an informed and transparent valuation process that comprehensively and fairly assesses the true value of distressed assets in the intricate landscape of financial restructuring.

Lowenstein Sandler Selected as Counsel to the Official Committee of Tort Claimant Creditors in the Chapter 11 Bankruptcy of the Diocese of Camden (New Jersey) Lowenstein Sandler has been selected as counsel to the Official Committee of Tort Claimant Creditors in the Chapter 11 bankruptcy case of the Diocese of Camden (New Jersey). Serving approximately 486,368 Catholics living in Atlantic, Camden, Cape May, Cumberland, Gloucester, and Salem Counties, the diocese is comprised of 62 parishes. The Lowenstein team is led by Jeffrey D. Prol, Brent Weisenberg, Lynda A. Bennett, Matthew Boxer, and Kenneth A. Rosen.

In a significant development, Lowenstein Sandler, under the guidance of Kenneth A. Rosen, has been chosen to represent the Official Committee of Unsecured Creditors in the Chapter 11 Bankruptcy proceedings of upscale department store chain Century 21. Headquartered in New York, Century 21 filed for Chapter 11 protection on September 10, 2020, in the U.S. Bankruptcy Court for the Southern District of New York. With 13 retail stores spanning New York, New Jersey, Pennsylvania, and Florida, along with an e-commerce platform, Century 21's bankruptcy case will be navigated by the leadership of Kenneth A. Rosen along with the experienced legal team from Lowenstein Sandler, including Jeffrey Cohen, Lynda A. Bennett, Eric Chafetz, Brent Weisenberg, and Lindsay H. Sklar."

In the current economic climate marked by fear and uncertainty due to the ongoing pandemic, various industries, including retail, hospitality, and oil and gas, are experiencing significant challenges. Reduced consumer spending and disruptions in supply chains have led to distressed situations, creating opportunities for savvy investors. This article explores the potential for investors to capitalize on distressed asset acquisitions in industries facing the impact of the pandemic. It emphasizes the need for a selective approach, highlighting that not every distressed situation warrants intervention. The dynamics of distressed asset acquisitions, particularly in the context of Chapter 11 bankruptcy, are discussed, with a focus on the importance of speed, due diligence, and the unique advantages of Chapter 11 "363" sales. The article suggests that, despite the challenges, investors with the agility to navigate these complexities can strategically position themselves to capitalize on undervalued assets and contribute to broader economic recovery while maximizing returns.

In the current volatile economic landscape, lenders are scrutinizing borrowers with unprecedented diligence, particularly in industries affected by the ongoing pandemic. This heightened scrutiny demands a strategic response from borrowers. This comprehensive guide explores the imperative need for borrowers to brace themselves for intensified lender scrutiny, offering insights into negotiating forbearance agreements, understanding the implications of bankruptcy, and ensuring valid and perfected security interests. Acknowledging lender apprehensions, the guide outlines a proactive approach, emphasizing the development of a robust action plan and a selective strategy for distressed situations. It provides practical guidance on expense reduction, payroll optimization, bookkeeping remediation, aggressive accounts receivable management, customer acquisition, and competitiveness assessment. The guide also delves into the dynamics of Chapter 11 bankruptcy, expedited sales, the importance of speed and due diligence, and the strategic opportunities presented by Chapter 11 "363" sales. Additionally, it highlights key considerations and strategic approaches for negotiating forbearance agreements, covering collateral valuation, forbearance periods, costs and fees, covenants, third-party oversight, communication protocols, and exit strategies. The guide concludes by emphasizing the importance of accuracy and third-party validation in financial projections and the need for borrowers to act proactively to ensure financial health and resilience in the face of uncertainties.

Healthcare bankruptcies present distinct challenges due to the sector's inherent complexities. This includes government oversight, intricate reimbursement structures, and the involvement of various stakeholders such as elected officials, unions, and patients. Healthcare CFOs must develop comprehensive communication plans that include patients, their families, and state regulatory authorities. Transparency and maintaining patient care standards are crucial components of these plans. Healthcare bankruptcies often trigger the appointment of an ombudsman to monitor patient care quality and represent patient interests. The court evaluates various factors to determine the necessity of appointing an ombudsman. Winning bids in healthcare bankruptcy auctions require more than just offering the highest price. Courts may consider factors such as the bidder's capitalization, financial stability, licensability, and commitment to preserving essential services. Healthcare CFOs must craft a robust 13-week budget, considering potential ombudsman fees, reimbursement delays, increased costs for care improvement, recoupments, and compliance with privacy laws. Creditors' committees play a pivotal role in investigating a debtor's financial affairs in healthcare bankruptcies. Proactive self-analysis by management can mitigate potential challenges during negotiations. CFOs play a pivotal role in steering healthcare organizations towards a robust and sustainable financial future. They must understand the specific challenges posed by government oversight, intricate reimbursement structures, and the involvement of diverse stakeholders.

Creditors' committees play a pivotal role in safeguarding the rights and interests of unsecured creditors during bankruptcy proceedings. By conducting thorough investigations, employing strategic approaches, and actively participating in the restructuring process, creditors can enhance their recovery and navigate the complexities of financial distress with greater confidence. Understanding the underlying causes of a company's Chapter 11 filing is paramount for creditors' committees. They must meticulously examine factors such as management shortcomings, adverse legal judgments, sales declines, and financial warning signs to uncover the true reasons behind the bankruptcy. Additionally, scrutinizing the debtor's restructuring strategies, utilizing effective tools like asset sales, and conducting thorough postpetition financial analyses are essential for maximizing creditor recovery. By employing these strategies, creditors can effectively protect their interests and emerge victorious in the intricate dance of bankruptcy proceedings.

Trucking companies facing financial distress can utilize Chapter 11 bankruptcy to restructure debts and revitalize their businesses. Careful planning and swift execution are key to success. Key considerations include proactive negotiations with stakeholders, effective communication with all parties involved, maintaining customer and vendor relationships, managing lender expectations, and prioritizing cash flow. By addressing these factors and seeking expert guidance, trucking companies can navigate the bankruptcy process effectively and position themselves for long-term success.

As companies increasingly seek Chapter 11 bankruptcy protection, labor costs have become a prime target for reductions. This trend, often driven by the desire to improve profitability and enhance valuation, can have detrimental consequences for workers, who may face layoffs, pay cuts, or reduced benefits. To address these concerns, this article advocates for the appointment of an examiner in cases where a debtor seeks to reject or modify collective bargaining agreements (CBAs) or retiree benefits. By acting as a public advocate, an examiner can provide the court with an impartial assessment of the situation and help ensure that the resolution is fair and equitable to all parties in interest. In an economy where unemployment is high, protecting the interests of workers is paramount. Requiring the appointment of an examiner would help to ensure that labor bears a fair share of the costs of reorganization, while also safeguarding the interests of other stakeholders.

Out-of-Court Workouts for COVID-Struggling Businesses: Bridging the Incentive Gap with Tax Breaks Problem: The COVID-19 pandemic has hit businesses hard, regardless of their financial health. Traditional bankruptcy, with its legal fees and collateral erosion, isn't ideal. Solution: Out-of-court workouts, where lenders and borrowers collaboratively restructure loans, offer a better way to preserve value for all. Challenge: Current CARES Act relief helps with regulations but lacks financial incentives for banks to engage in workouts. Proposed Solution: Implement tax breaks for banks that successfully restructure loans related to COVID-19. This could include: Reduced taxes on income from restructured loans. Targeted tax credits for exceeding pre-set workout goals. Benefits: Faster and cheaper than bankruptcy, saving taxpayers money. Higher loan repayment rates, boosting bank profits and tax revenue. Preserved jobs and economic activity. Concerns: Potential moral hazard addressed by: Limiting the duration of tax breaks. Targeting breaks to banks showing genuine effort. Conclusion: Tax breaks can unlock the power of out-of-court workouts, leading to a win-win for businesses, lenders, and the economy in the post-pandemic recovery.