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Employee-Related Litigation

By Mark S. Horoupian
November 30, 2015

Business bankruptcy filings are down significantly from their high point during the Great Recession. Some reports have corporate bankruptcies down nearly 70% from 2010. There is no shortage of speculation as to why this is the case, but all seem to agree that the ready availability of cash from institutional and non-institutional lenders, coupled with interest rates that have remained at all-time lows for years, are allowing even under-performing businesses to stay out of Chapter 11. The days of the main catalyst for business bankruptcies being a lender tightening a credit line or calling a loan due appear to be over, at least for now. Even if a company's existing lender wants out, often there is a new lender anxious to provide replacement financing. What appears to have replaced foreclosures and institutional debt issues as the straw that breaks the camel's back is litigation. In many cases seen locally (in the Central District of California), the nature of litigation that pushes a company over the line comes in the form of employee-related causes of action.

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