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What You Need to Know about Preferences: Practical Considerations for Lessors
One of the most difficult conversations a bankruptcy lawyer can have with a client is explaining why it has been sued for the recovery of money received pre-petition from a debtor for services rendered or goods supplied. We often hear the same incredulous mantras: “But the [debtor] owed me the money … for a long time.” “We helped stave off bankruptcy because we extended the payment terms.” Often these comments are made to the trustee or debtor who commenced the preference suit, before the creditor consults its attorney. The client believes the suit is a big misunderstanding because the payments it received were on account of a real debt and does not understand the admissions contained in its statements.
The pain of a preference action is much easier to accept in those situations where a creditor knowingly accepted a preferential transfer, but did so in the hope that a bankruptcy would not be filed or the preference suit would never be commenced. This occurs when a lawyer was consulted before the collection efforts were made, and the creditor was advised that the collection process might actually result in the recovery of funds that may have to be repaid if the obligor files for bankruptcy 90 days hence. We have seen a glint in the eye of many a client when deciding whether to accept a payment, or additional collateral from a financially strapped customer when we use the old adage: “Real men take preferences, wimps file proofs of claim.” Of course, the advice to knowingly accept a preferential transfer should only be given after consideration of the cost of obtaining the potentially preferential transfer. If legal action has to be taken to obtain a judgment or the leverage necessary to get payment, the cost may not be justified if a bankruptcy filing is inevitable. Often the creditor has very little information that will allow it to predict with any amount of accuracy the likelihood of a customer filing a bankruptcy petition in the succeeding 90 days.
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
Judge Rules Shaquille O'Neal Will Face Securities Lawsuit for Promotion, Sale of NFTs
A federal district court in Miami, FL, has ruled that former National Basketball Association star Shaquille O'Neal will have to face a lawsuit over his promotion of unregistered securities in the form of cryptocurrency tokens and that he was a "seller" of these unregistered securities.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Blockchain Domains: New Developments for Brand Owners
Blockchain domain names offer decentralized alternatives to traditional DNS-based domain names, promising enhanced security, privacy and censorship resistance. However, these benefits come with significant challenges, particularly for brand owners seeking to protect their trademarks in these new digital spaces.
Coverage Issues Stemming from Dry Cleaner Contamination Suits
In recent years, there has been a growing number of dry cleaners claiming to be "organic," "green," or "eco-friendly." While that may be true with respect to some, many dry cleaners continue to use a cleaning method involving the use of a solvent called perchloroethylene, commonly known as perc. And, there seems to be an increasing number of lawsuits stemming from environmental problems associated with historic dry cleaning operations utilizing this chemical.