The document discusses the legal theory of "deepening insolvency" which allows creditors to sue a company's officers and directors when their actions prolong the insolvency and increase debt. It summarizes a recent court case, In re Lemington Home for the Aged, where the Third Circuit Court of Appeals recognized "deepening insolvency" as a valid legal claim under Pennsylvania law. The court found that the officers and directors of Lemington Home failed to act with reasonable care and diligence, deepening the insolvency, and allowed the creditors' claims against them to proceed to trial. The ruling provides an opportunity for creditors to recover from officers and directors when their actions expand debt and prolong the insolvency
How to Decide if 7 or 11 is the Right Bankruptcy ChoiceSuzzanne Uhland
Deciding on filing for Chapter 7 or Chapter 11 bankruptcy depends on what future the majority shareholders and or creditors see for the company but many entrepreneurs and experienced business tycoons have found in bankruptcy motivation to keep going and get back on the horse.
Presentation London 2012 on the application of the common law concepts of shadow directors and equitable subordination in a Danish context given by advokat Michael Carsted Rosenberg
How to Decide if 7 or 11 is the Right Bankruptcy ChoiceSuzzanne Uhland
Deciding on filing for Chapter 7 or Chapter 11 bankruptcy depends on what future the majority shareholders and or creditors see for the company but many entrepreneurs and experienced business tycoons have found in bankruptcy motivation to keep going and get back on the horse.
Presentation London 2012 on the application of the common law concepts of shadow directors and equitable subordination in a Danish context given by advokat Michael Carsted Rosenberg
Bankruptcy of the person or organization who has insolvency law, was not paying the debts to creditors. In most jurisdictions, often lead to contraction.
In this tutorial, Chris Roush helps you become better acquainted with the inner-workings of bankruptcy court and shows you best practices for identifying stories in documents.
Roush is the director of the Carolina Business News Initiative and an associate professor at the University of North Carolina at Chapel Hill.
If you are having some financial trouble, you may be considering filing for bankruptcy. Before you make this decision, take a few moments to understand the implications and impacts that this will have on you and your family. Consider scheduling an appointment to sit down with a professional that will be sure to file everything correctly for you.
CAN I FILE BANKRUPTCY AGAIN EVEN IF I HAVE FILED BEFOREtonyturnerlaw
Got injured and looking for a personal injury lawyer in Orange Park, Florida? Let Law Office of Tony Turner help you return to the life. We are committed to helping you get the compensation you deserve with our wealth of knowledge and experience. For further details, visit tonyturnerlaw.com/
This presentation was for financial planners and insurance professions on risk planning concepts including trusts, business entities and estate planning strategies.
Bankruptcy of the person or organization who has insolvency law, was not paying the debts to creditors. In most jurisdictions, often lead to contraction.
In this tutorial, Chris Roush helps you become better acquainted with the inner-workings of bankruptcy court and shows you best practices for identifying stories in documents.
Roush is the director of the Carolina Business News Initiative and an associate professor at the University of North Carolina at Chapel Hill.
If you are having some financial trouble, you may be considering filing for bankruptcy. Before you make this decision, take a few moments to understand the implications and impacts that this will have on you and your family. Consider scheduling an appointment to sit down with a professional that will be sure to file everything correctly for you.
CAN I FILE BANKRUPTCY AGAIN EVEN IF I HAVE FILED BEFOREtonyturnerlaw
Got injured and looking for a personal injury lawyer in Orange Park, Florida? Let Law Office of Tony Turner help you return to the life. We are committed to helping you get the compensation you deserve with our wealth of knowledge and experience. For further details, visit tonyturnerlaw.com/
This presentation was for financial planners and insurance professions on risk planning concepts including trusts, business entities and estate planning strategies.
Describing My Daly Routine Actividades Para Los Alumnos NarracióNJuan Domingo Martinez
en esta actividad los alumnos contarán sobre su día favorito y que realizan durante todo el día y de esta manera utilizar el tiempo presente en un contexto real.
Creditor\'s Rights and Bankruptcy Issues in Real Estate Lawterigrasmussen
Discusses how creditors should deal with a recently filed case, the automatic stay, leasing, use and sale of assets, and nonbankruptcy remedies available to creditors, including receiverships, foreclosures, creditors\' bill, charging order, and assignments for the benefit of creditors
The annual Legal Seminar For Credit Professionals, presented by Kegler Brown in conjunction with NACM – Great Lakes Region and American Subcontractors Association, was combined with an international business and construction legal program. Topics included selling internationally, post-judgment collection, bankruptcy, bids and pay-if-paid clauses.
- Importance of structuring - trading trust
- Role of ATO in insolvency of small business
- Liquidator actions to be mindful of
Presenter: Ben Sewell
Sewell & Kettle Lawyers
If you have further questions later please contact me
Email: bsewell@sklawyers.com.au
The seventh webinar presentation in the M&A Litigation Series examines successor liability and liability based on an alter-ego and other veil-piercing theories. Prevalent misconceptions on successor liability are discussed, as are third party claims against the post-merger entities.
On our agenda:
Myths and Misconceptions about Successor Liability
Veil-Piercing
Third Party Claims
Historically, equity receiverships trace their origin to English Common Law, where the concepts of chancery jurisdiction and equitable relief were first introduced. Today, federal equity receiverships are used in a wide variety of actions pending in federal district courts. This webinar discusses some of the basic concepts underlying the modern federal equity receivership. Learn about the statutory underpinnings, the role of equity jurisdiction and the manner in which federal equity receivers are appointed.
Part of the webinar series: FEDERAL EQUITY RECEIVERSHIPS 2022
See more at https://www.financialpoise.com/webinars/
Fiduciary duty can be applied in many professionals such as investment agents in the bank and also importantly, the operator of an exploited and explored oil and gas field.
Insider Lease Agreements (Series: Fairness Issues in Real Estate-Based Bankru...Financial Poise
It is a common play in real estate to create a separate operating entity to serve as a tenant and execute a lease between the owner of the property and himself. Typically, this happens in assets which serve as a real estate-based business, such as a retail property. The structured enables the operator to reduce the taxable income of the business and also provide a liability shield for the property owner.
This arrangement can lead to some ethical issues, should the property owner become distressed. For example, is the lease amount above market and therefore being used to inflate the property valuation? Is rent actually being paid? Is there a proper lease in place or just an internal handshake? Attorneys need to understand the set-up in order to know what is in bounds and what is outside the lines.
To view the accompanying webinar, go to:https://www.financialpoise.com/financial-poise-webinars/insider-lease-agreements-2021/
Single Asset Real Estate Cases (Series: Fairness Issues in Real Estate-Based ...Financial Poise
Anyone involved in the field of creditors rights on a matter involving an LLC that exists solely to hold the principal asset has surely seen the play where, the night before property is scheduled to be sold at a foreclosure auction, the debtor files bankruptcy. For those not familiar with the process, doing so invokes the “Automatic Stay”, which prohibits the secured lender from foreclosing on the property. The debtor then attempts to make their case to the court for reorganization.
But is failing to pay your mortgage really something bankruptcy was meant to solve? If the bank was going to agree to a loan modification, wouldn’t the parties have worked something out by the time the sheriff sale was set? The bankruptcy code recognizes this and therefore has a section devoted to dealing with this specific kind of bankruptcy—the Single Asset Real Estate (“SARE”) case. The goal of this episode is to look into ethical issues surrounding these matters.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/single-asset-real-estate-cases-2021/
Navigate Chapter 11 Bankruptcy With Attorneys Of Sullivan County.pptxBrian761493
In the complex environment of economic turmoil, Chapter 11 bankruptcy in Sullivan is an effective tool for enterprises looking to revitalize and reorganize. Sullivan County people in challenging economic circumstances can embark on a path of financial rejuvenation with the help of an experienced bankruptcy attorney.
Are you confused when you hear the word bankruptcy? Does your business or financial situation require a rejuvenation? You are at the right place!
Help, My Business is In Trouble! (Series: Restructuring, Insolvency & Trouble...Financial Poise
When a business becomes financially troubled, the business owner often experiences denial, paralysis, or both. Lenders commonly lose confidence and then trust in the business, as communications tend to break down, deadlines are missed, and promises are broken. Small business owners commonly have issued personal guarantees, so business failure can often lead to personal financial stress. The good news is the business and business owner usually has some options, and even some leverage. This webinar explains what a business owner should- and should not- consider and do when dealing with financial trouble. Specific topics include discussion of bankruptcy (Chapters 7 and 11); assignments for the benefit of creditors; and friendly foreclosures. This webinar provides the business owner and her advisors with an overview of various restructuring and liquidation methods, a framework for how to decide between them, and practical tips for traversing the difficult environment that is financial distress.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/help-my-business-is-in-trouble-2021/
Pmf Legal provides clients with boutique legal advice on corporate and commercial matters. The firm has been responsible for a series of significant successes for clients and has been a major contributor in assisting them to protect and expand their businesses.
Negotiating and Drafting Cash Collateral/DIP Financing Orders (Series: Bankru...Financial Poise
Every company needs access to cash to fund its operations. Companies in bankruptcy are no different. But how should a company planning to enter bankruptcy approach this issue if all of its cash is tied up by a secured lender? What will a bankruptcy judge say when the company asks her permission to use cash on terms presented by its lender? How should lenders, debtors, and creditors approach negotiations over the terms of a cash collateral order or debtor-in-possession (DIP) financing agreement? For 2021, professionals must also understand the impact that the economic programs enacted under the CARES Act may have on the use of cash by a commercial debtor during its case. This webinar focuses on answering these questions for advanced business reorganization practitioners and advisors from the perspective of all parties to a negotiation, as well as addressing best practices in drafting, negotiating, and presenting cash collateral and DIP financing orders in complex reorganization proceedings.
To view the accompanying webinar, go to: https://www.financialpoise.com/financial-poise-webinars/negotiating-and-drafting-cash-collateral-dip-financing-orders-2021/
12Investing in FinanciallyDistressed andBankrupt Securitie.docxmoggdede
12
Investing in Financially
Distressed and
Bankrupt Securities
As we have learned from the history of the junk-bond market, investors have traditionally attached a stigma to the securities of financially distressed companies, perceiving them as highly risky and therefore imprudent. Financially distressed and bankrupt securities are analytically complex and often illiquid. The reorganization process is both tedious and highly uncertain. Identifying attractive opportunities requires painstaking analysis; investors may evaluate dozens of situations to uncover a single worthwhile opportunity.
Although the number of variables is high in any type of investing, the issues that must be considered when investing in the securities of financially distressed or bankrupt companies are greater in number and in complexity. In addition to comparing price to value as one would for any investment, investors in financially distressed securities must consider, among other things, the effect of financial distress on business results; theavailability of cash to meet upcoming debt-service requirements; and likely restructuring alternatives, including a detailed understanding of the different classes of securities and financial claims outstanding and who owns them. Similarly, investors in bankrupt securities must develop a thorough understanding of the reorganization process in general as well as the specifics of each situation being analyzed.
Because most investors are unable to analyze these securities and unwilling to invest in them, the securities of financially distressed and bankrupt companies can provide attractive value-investment opportunities. Unlike newly issued junk bonds, these securities sell considerably below par value where the risk/reward ratio can be attractive for knowledgeable and patient investors.
Financially Distressed and Bankrupt Businesses
Companies get into financial trouble for at least one of three reasons: operating problems, legal problems, and/or financial problems. A serious business deterioration can cause continuing operating losses and ultimately financial distress. Unusually severe legal problems, such as those that plagued Johns Manville, Texaco, and A. H. Robins, caused tremendous financial uncertainty for these companies, leading them ultimately to seek bankruptcy court protection. Financial distress sometimes results almost entirely from the burdens of excessive debt; many of the junk-bond issuers of the 1980s shared this experience.
Financial distress is typically characterized by a shortfall of cash to meet operating needs and scheduled debt-service obligations. When a company runs short of cash, its near-term liabilities, such as commercial paper or bank debt, may not be refinanceable at maturity. Suppliers, fearing that they may not be paid, curtail or cease shipments or demand cash on delivery, exacerbating the debtor's woes. Customers dependent on anongoing business relationship may stop buying. Employees may abando ...
1. It’s Alive! Deepening Insolvency
Helps Creditors Recover
___________________________________
Often in Chapter 11 cases of recent years, asset values are not sufficient to satisfy even the loans for
which they were pledged as collateral. In a liquidation of assets, pursuant to a Section 363 sale or otherwise,
often the assets generate proceeds insufficient to cover the lender’s debt, much less administrative claims or
unsecured claims. In a Chapter 11 case, secured claims normally have priority over administrative claims,
which in turn have priority over general unsecured claims. In such cases, there is apparently no possibility of
a dividend for unsecured creditors. However, there may be claims that can be asserted by creditors on behalf
of the debtor against officers and directors, as insiders of the debtor, that can often fund a distribution to
unsecured creditors, particularly if there is a directors and officers liability insurance policy in place.
One such claim, “deepening insolvency”, is a theory creditors have used against officers and
directors, with mixed success. Recently, creditors scored a major victory in asserting the claim of
“deepening insolvency” against the debtor’s officers and directors in the case of In re Lemington Home for
the Aged. Lemington is a case from the United States Court of Appeals for the Third Circuit (last stop before
the U.S. Supreme Court) which covers the states of Delaware, New Jersey and Pennsylvania.
Most states, including the influential Delaware Court of Chancery, have not adopted “deepening
insolvency” as a separate legal claim or as a claim for damages. The courts have reasoned that “deepening
insolvency” is duplicative of existing legal theories such as a breach of fiduciary duty and fraud. However,
the Third Circuit in Lemington has ruled that “deepening insolvency” is a valid legal claim under
Pennsylvania state law. “Deepening insolvency” is an injury to a debtor or its property from the expansion
of corporate debt and the prolongation of corporate life.
Lemington Home for the Aged (the “Home”) was a landmark non-profit in Pittsburgh. Despite
continued support from local government and charitable organizations, the Home was deemed insolvent in
1999. The Home was the subject of complaints, investigations, and two patient deaths due to negligence.
Despite a recommendation that the Home’s Chief Administrative Officer be replaced, she was not.
Moreover, it was alleged that the Home’s Chief Financial Officer failed to maintain a general ledger,
maintained “deplorable” financial records, and had no corporate Treasurer.
In 2004, the Home’s Chief Administrative Office recommended that it file for Chapter 11 bankruptcy
protection. The Board instead decided to borrow $1 million as additional capital, conditioned on a viability
study that was never obtained.
Based on these facts, the unsecured creditors’ committee for Lemington filed a lawsuit against the
officers and directors of the Home alleging breaches of fiduciary duties of loyalty and good care, and for
deepening insolvency. The defendants moved to dismiss the complaint based in part on the business
judgment rule, which normally entitles an individual director to a presumption that his or her acts are in the
best interests of the corporate entity. The Federal District Court granted the defendants’ motion for summary
judgment, resulting in a dismissal of the claims against the officers and directors. However, the creditors’
committee, on behalf of the debtor, appealed. The Third Circuit Court of Appeals vacated the District
Court’s ruling and remanded the case for trial.