Bankruptcy, Insolvency, Debtor and Creditor Rights
Led by A. Carter Magee, Jr. and Andrew S. Goldstein, the Bankruptcy and Restructuring Group represents debtors, creditors, and trustees in financially-distressed situations. With decades of direct hands-on experience, we understand insolvency issues from all sides of the credit equation. Our team has served as lead counsel for borrowers and lenders in scores of chapter 11 bankruptcy cases. Our debtor client roster includes businesses and individuals engaged in start-ups, high-tech, telecommunications, healthcare, and pharmaceuticals to transportation, manufacturing, distribution, natural resources, and real estate development.
While the legal process often includes the sale of some or all of our clients’ assets and a court-approved payment plan to creditors, we are widely recognized for our ability to craft workable reorganization plans that achieve our clients’ goals. We have a sustained record of success –98% of our Chapter 11 debtor representations have resulted in confirmed reorganization plans.
We know that a public bankruptcy process is not always right for every business or individual. Therefore, over time, we have developed a niche in out-of-court workouts and restructurings. Our process encourages an open and direct line of communication with creditors and a structured method to help the affected businesses or individuals resolve their financial problems consensually with creditors, or, failing that, liquidate in an orderly process outside of court proceedings. For smaller businesses and special situations, we often resolve their financial issues outside of court without the expense and delay associated with court proceedings.
Similarly, we have been able to recover substantial returns when representing creditors and unsecured creditors committees in similar situations. Our creditor client roster includes a number of national, regional, and local banks and credit unions and comprises a large part of our insolvency practice. Creditors rely on us to help them navigate through complicated insolvency and bankruptcy matters to ensure that their interests are properly represented and well protected. Because of our extensive experience in handling both large and small businesses, as well as complex individual consumer and business bankruptcy cases, we have a comprehensive understanding of the rights and remedies of creditors in and out of the insolvency process.
We have found that, in distress, there is opportunity. We are experienced with the legal and transactional issues that arise in bankruptcy sales. Today, sophisticated debtors, creditors, and investors use the bankruptcy process to buy and sell distressed businesses. The successful seller disposes of assets in an orderly manner under court supervision. The successful purchaser acquires assets free and clear of most liens, claims, interests, and other encumbrances. After the court approves the highest and best bid for the assets, the debtor usually concludes its affairs under a court-approved plan of distribution. The plan provides for the sale proceeds to be paid to creditors, and any proceeds remaining after all debts are paid will be paid to equity holders. The seller takes over the operating assets and the going-concern value of the entity is preserved.
For over 20 years, we have been representing individuals with complex financial problems, both in and out of bankruptcy court. Bankruptcy law allows most individual debtors to discharge their financial obligations. Because of major changes in bankruptcy law recently, it is now more difficult for higher income individual debtors to receive discharges, but we have assisted many high-income debtors through the process – and they have received their discharges. Often, however, negotiated voluntary reductions of debt outside of a formal court process can achieve nearly the same result. Such plans however, may have tax consequences involving cancellation of debt income. The tax code does provide a limited safe harbor, however. In some cases, bankruptcy law requires certain debtors with higher incomes to pay their creditors through a court-approved plan over a period of years in an effort to pay some or all of their debts. For lower-income consumer debtors, discharges are generally still available.
We are also thoroughly familiar with the credit side of consumer bankruptcy matters, both in and out of the bankruptcy court. We have handled thousands of cases for consumer creditors who have claims secured by real estate, mobile homes, automobiles, and other property. Whether the situation requires an aggressive approach resulting in repossession of a creditor’s collateral, or a negotiated approach resulting in a structured payment plan, our attorneys and staff move quickly and decisively to represent our clients’ interests through our streamlined process.
We have been involved in municipality insolvencies and have advised municipalities that find themselves in financial trouble, usually associated with unmanageable bond debt or debt rating issues.
Congress created chapter 12 to protect family farmers. This chapter is much more lenient for debtors and offers them an opportunity to substantially reduce many of their debts and modify their secured debts with long-term payment plans. We have represented a number of family farmers in chapter 12.