Vigilance in detecting red flags—such as declining cash flow, increasing debt and falling sales—can help prevent severe outcomes, like bankruptcy, and provide an opportunity for management to make necessary adjustments, restructure operations, or seek external help.
Sanchez shows the limits of bankruptcy jurisdiction in concrete terms. In the court’s hard-hitting analysis, the decision should at least convince bankruptcy courts to avoid hearing most post-confirmation and unrelated third-party disputes.
A recent decision by Bankruptcy Judge Brendan Shannon was peppered with some harsh words for a defendant in an adversary proceeding. Judge Shannon said the party’s “failure to perform basic discovery responses and participation in litigation … has been breathtaking."
Litigation funding, has become a sophisticated big business. These funders expect substantial return for funding litigation costs up front and taking on the risk of low or no recovery. But how should such agreements be structured?
Langston serves as a reminder that the expiration of a deadline in the Rules may not be the final word on the matter. While not often the case, there may be an equitable defense to an expired deadline.
In a decision of first impression, the U.S. Bankruptcy Court for the Northern District of Illinois imposed sanctions on a debtor’s counsel and his law firm for filing a brief that included fabricated citations to case law and nonexistent quotations that were generated by AI.
A recent Third Circuit decision supports the general proposition that a bankruptcy proceeding cannot be used to revive foreclosure-related disputes that have been previously and conclusively resolved by a state court.
The “risk management” aspect of LME focuses on the compensation to be paid to the participating lenders to provide new investment and the additional time or optionality gained for the equity sponsor. Frequently the LME is followed by a bankruptcy case in which the participating lenders again attempt to exercise control over the process and their compensation through a restructuring support agreement and a prepackaged Chapter 11 plan. At least one district court has concluded that compensation payable to a subset of lender/investors in a creditor class violates this requirement, derailing a confirmed prepackaged Chapter 11 plan and remanding to the bankruptcy court to remedy.
Although alleged oversight claims are not uncommon, this case was unusual because the claims were not asserted derivatively by shareholders. Given the informational advantage enjoyed by the plan administrator, it was not surprising that the court found the complaint adequately pleaded Caremark claims against the named director defendants and two of the company’s officers.
Representing a lender during the workout of a troubled commercial real estate loan requires an attorney to protect the client from unanticipated consequences and material miscalculations. In addition to negotiating and documenting the prospective workout agreement, an attorney must preserve the client’s rights and remedies during business-level negotiations to protect against prejudice in the event a final agreement cannot be reached and remedies must be pursued.
