Official Vietnamese American Chamber of Commerce’s Post

🎃 This Halloween, don't let #Chapter11 bankruptcy spook you! 🦇 If you've ever wondered what it entails, check out our latest blog post by BAST AMRON LLP Attorney Jaime Leggett.   💰 Discover what sort of income is necessary to fend off the "vampires" of debt in a Chapter 11 reorganization. It's not all magic; we've got the details on funding and payments.   🕷Once your business files for Chapter 11, it transforms with new powers. Learn how it can protect itself from creditors, manage contracts, and navigate the bankruptcy process.   ⚖Wondering how to escape Chapter 11? It's all about reorganization. Find out how to craft a plan, what creditors are entitled to, and the key steps to a successful exit.   🦉 Chapter 11 does not need to be spooky, as you can consult with a qualified bankruptcy lawyer to guide you through the process.   Happy Halloween, and may your business rise from the grave! Read the full blog post for more details. 🕸️👻 https://lnkd.in/eYRmXAhQ. #insolvencylitigators #insolvencyandbankruptcy #insolvencyandrestructuring  

"Financial Engineering" = Hire Counsel in "Longstanding Romantic Relationship" with Bankruptcy Judge? "David R Jones made Houston the nation’s insolvency capital before an undisclosed relationship forced his resignation and prompted calls for reform." Happy Thanksgiving, America! Another self-important, self-serving institutional fixture distorts U.S. law to puff up himself, and also to benefit his "concealed" live-in partner, "a lawyer who frequently worked on matters assigned" to the SISSIF (self-important, self-serving institutional fixture). See Financial Times "The downfall of the judge who dominated bankruptcy in America" by Sujeet Indap. “'There is simply no ambiguity in my mind,' said Judge David R Jones as he made a ruling last May in the bankruptcy case of Serta Simmons Bedding, LLC, a large, private equity-backed mattress company. “'And I appreciate that perhaps a different court reached a different conclusion but, again, I sit in with these matters every single day . . . this is very easy for me.' Jones was then the chief judge for the U.S. District Court, Southern District of Texas federal bankruptcy court and based in Houston. "His decision cleared the way for a slim majority group of creditors to take control of the company and leave another group’s holdings close to worthless. Serta Simmons Bedding, LLC itself would go on to quickly exit court supervision, as the company wished." II The "ruling cemented the status of Jones as the ultimate kingmaker in big US bankruptcy cases — so far in 2023, of the 54 large Chapter 11 cases filed, 25 landed in the U.S. District Court, Southern District of Texas, where only two judges, including Jones, oversaw large restructurings. This near-majority was more than those total bankruptcy filings in the traditional stalwarts, Delaware and New York, combined."

Today our firm confirmed a Chapter 11 bankruptcy plan of reorganization in the U.S. Bankruptcy Court for the District of New Jersey. Our client, a small business owner, was struggling to resolve a $4,200,000 default judgment against both him individually and his single member LLC. During the Chapter 11 case, our client used an adversary proceeding and motion practice to substantially reduce the $4,200,000 default judgment down to $148,000. To do this, we bifurcated the judgment into: 1) a secured portion totaling approximately $148,000 to be paid at 0.00% interest over five (5) years (and avoided the default judgment to the extent it impaired his homestead exemption); and 2) a general unsecured portion of $0.00. The net result is an approximately $4,000,000 reduction of the state court default judgment, which was not obtained by a decision on the merits against our client, and the vast majority of which was interest. To protect our client's post-petition income during his reorganization, at the start of the bankruptcy case, we prevented levy and sale our client's LLC's assets during the course of the Chapter 11 by obtaining entry of an order granting our client's motion to extend the automatic stay protections to his LLC. Now, with the confirmation order in place, the stay will remain in place through completion of the plan, which will span the next 5 years. This will allow our client to confidently operate his closely held company and fund his plan of reorganization. As a result of paying $0.00 on the general unsecured portion of the default judgment, our client could propose 100% distributions to all other general unsecured creditors, which is a win-win for both our client and his legitimate general unsecured creditors. Our client is now emerging from Chapter 11 with clarity around the state of his assets, and debts, and can confidently continue to operate his small business. hashtag #reorganization #bankruptcy #chapter11 #chapter11bankruptcy #litigation #newjerseybankruptcy #njbankruptcy

Friday Takeaway: Bankruptcy is a word we’ve heard a lot in the last couple of weeks. While typically having a negative connotation, it can be a lifeline for many individuals and companies. According to US Bankruptcy Code, there are currently six chapters: Chapter 7 (liquidation for individuals or businesses) Chapter 9 (municipalities) Chapter 11 (reorganization for businesses) Chapter 12 (family farmers and fishermen) Chapter 13 (reorganization for individuals) Chapter 15 (international) While Chapter 11 is the most arduous and costly type of bankruptcy, it can allow a business to continue operations and get back on track to avoid liquidation. In 2020, a Subchapter V was added to aid small business in bankruptcies, being more efficient, more flexible, and less expensive. Today, that is defined by “having aggregate noncontingent liquidated secured and unsecured debts of not more than $7,500,000.” https://lnkd.in/gth5XHKg

It is a scandal that mega corporations and the mega wealthy abuse the bankruptcy system to escape responsibility for the death and mayhem they cause. Remember when the Sackler family unleashed the opioid epidemic? Yeah, they made billions off that. And before shoving their company, Purdue Pharma, through bankruptcy, they made sure to siphon more billions out of the company for themselves. Next, they used the bankruptcy proceedings not just to discharge Purdue’s liabilities, but also to have the plan release the Sacklers PERSONALLY from liability for fraud and other intentional torts. Making those siphoned billions unreachable to victims. I’ll let the bankruptcy trustee’s brief to the Supreme Court challenging this bankruptcy plan explain: ********** This case concerns the reorganization in bankruptcy of respondent Purdue Pharma L.P. and its affiliates, stemming from their role in fueling the opioid epidemic that has ravaged families and communities throughout the Nation. In approving Purdue’s reorganization plan, the court of appeals relied on residual provisions of the Bankruptcy Code, 11 U.S.C. 101 et seq., to validate a sweeping nonconsensual release of nondebtors’ claims against other nondebtors—the Sacklers and a host of associated individuals and entities. That release ex- tends to claims based on fraud and other willful misconduct that could not have been discharged even if the Sacklers themselves had submitted to bankruptcy and thereby surrendered their assets for distribution to their creditors. The plan instead permits the Sacklers, who would otherwise face claims alleging damages in the trillions, to obtain full repose while keeping billions of dollars that they siphoned from Purdue in the years before these Chapter 11 proceedings. … The opioid epidemic spawned extensive litigation against Purdue and the Sacklers. As early as 2007, members of the Sackler families “anticipated that the effects of litigation against Purdue would eventually im- pact them directly.” J.A. 847. Apparently to mitigate that threat, the Sacklers began to take money out of Purdue, in what one family member characterized “as a ‘milking’ program.” J.A. 681 (citation omitted). Be- tween 2008 and 2016, “Purdue distributed a significant proportion of the company’s revenue—an approximated $11 billion in total—to Sackler family trusts and holding companies.” J.A. 847-848. Those distributions repre- sented a dramatic increase from previous distribution patterns and left Purdue in “a significantly weakened financial position.” J.A. 848. ********* A legal claim is a piece of property. For the bankruptcy court to impose releases on claims against the Sacklers, who didn’t go through bankruptcy, is nothing short of theft. The estimated worth of opioid claims against the Sacklers exceeds $1 trillion. With a T. If they get away with this, the Sacklers will remain billionaires after destroying hundreds of thousands of lives. It’s a scandal.

Subchapter V within chapter 11 of the Bankruptcy Code was put in place to create a more cost-efficient and streamlined restructuring process. In response to COVID-19, the debt cap for eligibility was temporarily increased from $3 million to $7.5 million, which has allowed additional debtors to take advantage of the subchapter’s benefits. The American Bankruptcy Institute’s Subchapter V Task Force has issued a preliminary report recommending that the increased cap remain in effect permanently.    Patterson Belknap Partner Dan Lowenthal and Associate Kimberly Black discuss the report and explain the potential reasons behind subchapter v’s increasing popularity in the firm’s Bankruptcy Update blog: https://lnkd.in/egn2fu7b #bankruptcycode #americanbankruptcyinstitute #restructuring

Partnering With Experts – Key Steps To Navigating Bankruptcy Chapter 11 Overcoming financial challenges can be a complex and overwhelming process, especially when facing the prospect of filing for Chapter 11 bankruptcy. Partnering with experts who have the knowledge and experience in navigating the intricate landscape of Chapter 11 can be crucial for ensuring a smoother and more successful outcome. In this blog post, we will discuss key steps to consider when seeking professional guidance in dealing with bankruptcy Chapter 11 proceedings, and how expert support can make all the difference in your financial recovery.Identifying the Right Bankruptcy Experts A crucial step in navigating Chapter 11 bankruptcy is identifying the right bankruptcy experts to guide you through the process. These professionals play a vital role in ensuring a successful outcome for your business, so it is important to select them carefully. In this chapter, we will discuss the qualifications to look for in bankruptcy experts and the sources to find qualified professionals. Qualificat... #Bankruptcy #bankruptcyadvice #bankruptcysteps #businessrecovery #Chapter11bankruptcy #ExpertGuidance #Experts #financialadvice #financialrestructuring #legalconsultation #LegalExpertise #Navigating #navigatingbankruptcy

Today Middlebrooks Shapiro, P.C. confirmed a Chapter 11 bankruptcy plan of reorganization in the U.S. Bankruptcy Court for the District of New Jersey. Our client, a small business owner, was struggling to resolve a $4,200,000 default judgment against both him individually and his single member LLC. During the Chapter 11 case, our client used an adversary proceeding and motion practice to substantially reduce the $4,200,000 default judgment down to $148,000. To do this, we bifurcated the judgment into: 1) a secured portion totaling approximately $148,000 to be paid at 0.00% interest over five (5) years (and avoided the default judgment to the extent it impaired his homestead exemption); and 2) a general unsecured portion of $0.00. The net result is an approximately $4,000,000 reduction of the state court default judgment, which was not obtained by a decision on the merits against our client, and the vast majority of which was interest. To protect our client's post-petition income during his reorganization, at the start of the bankruptcy case, we prevented levy and sale our client's LLC's assets during the course of the Chapter 11 by obtaining entry of an order granting our client's motion to extend the automatic stay protections to his LLC. Now, with the confirmation order in place, the stay will remain in place through completion of the plan, which will span the next 5 years. This will allow our client to confidently operate his closely held company and fund his plan of reorganization. As a result of paying $0.00 on the general unsecured portion of the default judgment, our client could propose 100% distributions to all other general unsecured creditors, which is a win-win for both our client and his legitimate general unsecured creditors. Our client is now emerging from Chapter 11 with clarity around the state of his assets, and debts, and can confidently continue to operate his small business. #reorganization #bankruptcy #chapter11 #chapter11bankruptcy #litigation #newjerseybankruptcy #njbankruptcy

I often share my observations here about the changing nature of restructuring law and practice. One of the big trends over the last decade has been finding alternatives to Chapter 11 bankruptcy, due to its cost (high), complexity (high), and speed (often slow). As a result, many restructuring professionals, who have spent most of their careers operating in bankruptcy courts (or at least preparing to do so), have become more multifaceted in their experience and expertise. That’s certainly been my experience. This Bloomberg article notes an interesting related trend, which is bankruptcy practices in many large law firms shifting to an emphasis on “liability management,” and even rebranding their groups as liability management. In this context, liability management means employing creative financial and legal strategies to restructure a company's debt and extend its runway outside of formal bankruptcy proceedings. This trend is driven by several factors and is likely to continue for a number of reasons, including: 1. Cost-effectiveness: As mentioned in the article, Chapter 11 bankruptcies have become increasingly expensive. Liability management transactions often provide a more cost-effective alternative for companies seeking to address financial distress. 2. Flexibility: These out-of-court restructurings offer greater flexibility in terms of timing and structure, allowing companies to tailor solutions to their specific needs without the constraints of bankruptcy court oversight. 3. Preservation of value: By avoiding the stigma and potential value destruction associated with formal bankruptcy, companies can better preserve their brand, customer relationships, and overall enterprise value. 4. Private equity influence: The article notes that many of these transactions are driven by private equity-backed companies. As PE firms continue to play a significant role in the corporate landscape, their preference for these strategies is likely to persist. Brian Resnick, head of Davis Polk & Wardwell LLP’s liability management and special opportunities practice, is quoted in the article: “Many of us went from primarily being bankruptcy lawyers to being liability management lawyers with bankruptcy being a relatively smaller part of our practice.” It’s clear that restructuring professionals must now be adept at navigating both in-court and out-of-court processes, understanding the nuances of complex financial instruments, and balancing the interests of diverse stakeholder groups. While traditional bankruptcy expertise remains valuable—and I’m glad I spent the early stages of my career developing it—the ability to craft innovative solutions that keep companies out of court is increasingly becoming a differentiator.

As noted here in this article on Daily DAC LLC - Distressed Asset Central from CRA Member Michael Brandess of Husch Blackwell, there is a clear prioritization of payment status in #bankruptcy claims. As states update their #receivership statutes most are building in a prioritization, typically similar to the bankruptcy prioritizations. However, many states have not updated their receivership statutes (in fact more than 60%) making even the receivers fees a question through the process. In states like this, and really even in states where there is a statute on payment prioritization, a receivers first step (often before even taking the appointment) should be to have a discussion with the secured creditor(s) on payment and reach an agreement. What other steps do you take in your process to ensure your fees and those you engage are paid for your efforts? https://lnkd.in/dMfUmeVU #commercialreceivership #receiverships #insolvency #turnaround #turnarounds #turnaroundmanagement #restructuring