Yesterday, Middlebrooks Shapiro, P.C. confirmed another Chapter 11 bankruptcy plan of reorganization in the U.S. Bankruptcy Court for the District of New Jersey. Our client, a restaurant, was on the brink of closure due to merchant cash advance (MCA) liens on its cash collateral (its receivables i.e. cash flow). It also required assistance to address outstanding tax debts and various other general unsecured debts. At the start of the Chapter 11 case, our client used an emergency motion to approve interim use of cash collateral to stop the various levies on its receivables, which was granted, and which freed up our client's cash flow so that it could begin to operate again. A final order on use of cash collateral was later entered, permitting our client to continue to operate during the course of the bankruptcy using that levied cash flow to operate post-petition. During the Chapter 11 case, our client also moved for Court approval of its entry into a new, extended lease with its landlord of the property where it operates it business. The Court approved that motion, and our client was authorized to enter into this new lease, which ensured its continued operation at its existing location, and prevented potential loss of its business and/or significant expense required to locate a new property. During the confirmation process, the Court approved the adequacy of our client's Disclosure Statement and, after our client solicited votes for its Plan, it obtained ballots from two (2) impaired classes accepting the Plan. After working with counsel to a taxing authority to fine-tune the language in the proposed Confirmation Order, and with the consent of the Office of the United States Trusteee, the Court entered the Confirmation Order. Under the confirmed Plan, our client will make interim distributions on all allowed claims, which are all to receive 100% distributons over the term of the Plan, including to taxing authorities on both pre- and post-petition priority claims. Our client is now emerging from Chapter 11 with a new, extended lease in place, and with the freedom and confidence to operate its business without risk to its cash flow. The net result is 100% distributions to all creditors with allow claims, which is a win-win result for both our client and its creditors. #reorganization #bankruptcy #chapter11 #chapter11bankruptcy #litigation #newjerseybankruptcy #njbankruptcy
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Yesterday, Middlebrooks Shapiro, P.C. confirmed another Chapter 11 bankruptcy plan of reorganization in the U.S. Bankruptcy Court for the District of New Jersey. Our client, a restaurant, was on the brink of closure due to merchant cash advance (MCA) liens on its cash collateral (its receivables i.e. cash flow). It also required assistance to address outstanding tax debts and various other general unsecured debts. At the start of the Chapter 11 case, our client used an emergency motion to approve interim use of cash collateral to stop the various levies on its receivables, which was granted, and which freed up our client's cash flow so that it could begin to operate again. A final order on use of cash collateral was later entered, permitting our client to continue to operate during the course of the bankruptcy using that levied cash flow to operate post-petition. During the Chapter 11 case, our client also moved for Court approval of its entry into a new, extended lease with its landlord of the property where it operates it business. The Court approved that motion, and our client was authorized to enter into this new lease, which ensured its continued operation at its existing location, and prevented potential loss of its business and/or significant expense required to locate a new property. During the confirmation process, the Court approved the adequacy of our client's Disclosure Statement and, after our client solicited votes for its Plan, it obtained ballots from two (2) impaired classes accepting the Plan. After working with counsel to a taxing authority to fine-tune the language in the proposed Confirmation Order, and with the consent of the Office of the United States Trusteee, the Court entered the Confirmation Order. Under the confirmed Plan, our client will make interim distributions on all allowed claims, which are all to receive 100% distributons over the term of the Plan, including to taxing authorities on both pre- and post-petition priority claims. Our client is now emerging from Chapter 11 with a new, extended lease in place, and with the freedom and confidence to operate its business without risk to its cash flow. The net result is 100% distributions to all creditors with allow claims, which is a win-win result for both our client and its creditors. #reorganization #bankruptcy #chapter11 #chapter11bankruptcy #litigation #newjerseybankruptcy #njbankruptcy
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There are two provisions of the Bankruptcy Code that incentivize creditors to continue to work with financially distressed debtors — Sections 503(b)(9) and 546(c). These two sections apply to creditors who remain unpaid at the time of bankruptcy, and also give them options to take certain actions to increase their likelihood to be paid (§503(b)(9)) or to recover their goods (§546(c)). Bill Siegel explains. https://lnkd.in/gDwePirE #Bankruptcy #CreditorsRights #VendorRights
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The Fifth Circuit has already handed down several bankruptcy opinions this year. And in a decision last week, the court sent a warning to creditors: A creditor with actual knowledge of an ongoing bankruptcy case is bound by a confirmed plan—even if the debtor failed to give notice to the creditor, and the creditor did not participate or file a claim. The court acknowledged that a “debtor has a general obligation to list its creditors when first filing a bankruptcy petition,” and that the “failure to do so typically means the unlisted creditor’s claims are exempt from discharge.” But once a creditor learns of the case—and obtains actual knowledge of it—“that party must ‘come forward . . . or else lose their rights through the sweeping discharge of Chapter 11.’” In the case, nobody disputed that the debtor failed to list the creditor in its schedules and never gave it notice of the bankruptcy. But the creditor nonetheless discovered that the case was pending, monitored the docket, and even discussed the case with the debtor’s counsel. Under those circumstances, the creditor was bound by the plan. Notably, the creditor in the case was an unsecured creditor. And the court did not address an important caveat for secured creditors: Typically, a secured creditor who opts not to participate in a bankruptcy will have its lien rights "ride through" a plan unaffected—even if that secured creditor has actual knowledge of the bankruptcy case. A link to the opinion, In re German Pellets La., L.L.C., No. 23-20040 (Fifth Cir. Jan. 30, 2024), is in the comments. #bankruptcy #restructuring #chapter11
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Debtors under the Bankruptcy Code are generally not required to pay post-petition interest to unsecured creditors—unless the “solvent debtor” exception applies. On September 10, the Third Circuit joined the Fifth and Ninth Circuits in recognizing the continuing vitality of this exception, which generally requires “solvent” debtors to pay unsecured creditors post-petition interest at the contract rate.
Jevic Keeps on Gifting: Third Circuit Reaffirms Solvent Debtor Exception by Holding Unsecured Creditors of Solvent Debtor Entitled to Post-Petition Interest at the Contract Rate
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Small Business Bankruptcy Rules Get Tighter After Subchapter V Law Expires By James Hinds Senator Rand Paul's (R-Ky.) hold on a bill by Senator Dick Durbin has resulted in the expiration of the Subchapter V law, causing a significant impact on small businesses. The debt limits for Subchapter V cases have reverted to the prior $2.7 million threshold from the $7.5 million limit. Subchapter V, a vital tool for distressed small businesses with debts ranging between $2.7 million and $7.5 million, saw widespread use over recent years. Between February 19, 2020, and September 30, 2023, Subchapter V accounted for about 30% of all chapter 11 bankruptcy filings in the U.S. The changes in these bankruptcy rules highlight the evolving landscape for small businesses navigating financial distress. Stay informed on the latest developments in bankruptcy laws to make informed decisions for your business's financial future. #Bankruptcy #SmallBusiness #SubchapterV #FinancialNews
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Join us for the Bankruptcy and the New Uniform Special Deposits Act: Insulating Depositor Funds From the Reach of Most Creditors webinar. Speakers Patrick Guida from Duffy & Sweeney, LTD, Jason Harbour from Hunton Andrews Kurth LLP and Michael M. Wiseman from Sullivan & Cromwell LLP will review the Uniform Special Deposits Act (SDA), a new state law promulgated by the Uniform Law Commission and recommended for enactment nationwide. Special deposits can serve an important function in commerce and industry by affording safety and security to the funds deposited in such an account. Regrettably, the current common law of special deposits has been fraught with ambiguities and inconsistencies which have undermined the utility of the device. The panel will discuss the legal uncertainties and the four “mischiefs” which have plagued the common law of special deposits for many years and how the SDA will clarify the law and remedy those mischiefs. The panel will also explain why the SDA is of tremendous benefit and significance to bankruptcy practitioners and secured lenders. Among other provisions, the panel will review the “opt-in” feature of the law and the special choice of law and forum selection rules. Thursday, July 18 2024 1:00 pm - 2:50 pm EST Duffy & Sweeney, LTD | Hunton Andrews Kurth LLP | Sullivan & Cromwell LLP Register Here: https://lnkd.in/dqQP8QMN
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Commercial Chapter 11 bankruptcy filings experienced a surge in July 2024, jumping by 40% to reach 510 filings compared to 364 in July 2023. Additionally, overall commercial filings saw a significant increase, rising by 17% to 2,335 filings in July 2024 from 2,004 in the same month last year. #Bankruptcy #CommercialFilings #BusinessTrends
Commercial Chapter 11 Filings Surged in July
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The Bankruptcy Clause: Ensuring Fairness in U.S. Bankruptcy Law At the heart of the United States' approach to addressing insolvency and providing a path for financial rebirth lies the Bankruptcy Clause. Enshrined in the U.S. Constitution, this pivotal clause grants Congress the exclusive authority to enact uniform laws on the subject of bankruptcies throughout the United States. Its significance cannot be overstated, as it underpins the federal bankruptcy system, ensuring consistency and fairness in the treatment of debtors and creditors across state lines. The Bankruptcy Clause is more than a mere legislative power; it is a foundational principle that reflects the balance between creditors' rights and debtors' need for a fresh start. By centralizing bankruptcy law at the federal level, the clause prevents a patchwork of state laws that could lead to inequalities and inefficiencies in the bankru... #AssetLiquidation #AutomaticStay #BankruptcyClause #bankruptcycourt #bankruptcyexemptions #bankruptcyfilingprocess #bankruptcylaw #bankruptcytrustee #Chapter11bankruptcy #Chapter13bankruptcy #Chapter7bankruptcy #consumerprotection #creditrebuilding #DebtRelief #dischargedebts #filingforbankruptcy #FinancialManagement #financialrecovery #meanstest #securedcreditcard #U.S.Constitution
The Bankruptcy Clause: Ensuring Fairness in U.S. Bankruptcy Law
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📢 Attention Business Owners and Partnerships Facing Financial Challenges! 📢 Navigating Chapter 11 Bankruptcy: Understanding the Debtor in Possession Considering Chapter 11 bankruptcy for your business? Attorney Robert Stiberman sheds light on the critical role of the "Debtor in Possession." Chapter 11 Basics: Chapter 11 is used to reorganize businesses like corporations, sole proprietorships, or partnerships. Corporation's bankruptcy doesn't risk stockholders' personal assets beyond their investment. Sole proprietorship bankruptcy includes both business and personal assets. Partnership bankruptcy keeps partners' personal assets separate but may use them to pay creditors. The Debtor in Possession's Role: Section 1107 of the Bankruptcy Code appoints the debtor as a fiduciary with trustee-like powers and duties. Responsibilities include accounting for property, examining and objecting to claims, and filing reports. The debtor can employ professionals like attorneys and accountants with court approval. The U.S. trustee monitors the debtor's compliance with reporting requirements. Special Considerations: Railroad reorganizations have specific requirements under subchapter IV of chapter 11. Stock and commodity brokers are restricted to chapter 7, not chapter 11. Seeking expert guidance through Chapter 11? Contact us for a consultation today! Learn more at: https://lnkd.in/eSqsVcA8 #Chapter11Bankruptcy #DebtorInPossession #BusinessReorganization #FinancialChallenges #BusinessOwners #Partnerships #BankruptcyBasics #FiduciaryResponsibilities #BankruptcyCode #TrusteePowers #DebtorRole #AccountingForProperty #CreditorsRights #LegalAdvice #AttorneyRobertStiberman #ProfessionalEmployment #NavigatingBankruptcy #SoleProprietorship #CorporationBankruptcy #PartnershipAssets #FinancialPlanning
Chapter 11 Florida Bankruptcy Lawyer | Business Bankruptcy Attorney Free Consultation
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Understanding the Cram Down: Navigating Chapter 11 Challenges In the realm of Chapter 11 bankruptcy, the term "cram down" is crucial for debtors seeking to restructure their obligations despite creditor objections. This article by George Kuney highlights some key points: What Cram Down is Key Requirements Fair and Equitable Treatment Impaired Classes Avoiding Unfair Discrimination Understanding these fundamentals can significantly impact negotiations and outcomes in distressed scenarios. For anyone navigating the complexities of bankruptcy, grasping the intricacies of cram down is essential for successful restructuring. https://lnkd.in/eFsqCs2
Kuney’s Corner - Cram Down: When the Creditor Says "No"
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