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Everyone Should Plan for a Financial Catastrophe

9/16/2020

Author: Andrew M. Thaler

For years I have advocated that everyone, particularly business owners, should make a concerted effort to learn what would happen if a financial disaster befell them or their business. As a bankruptcy attorney I have seen once wealthy individuals and thriving businesses fall on bad times, often due to health reasons, business reversals, and divorce. However, who would have thought that the entire world would be struck with the devastating consequences of the COVID-19 Virus? There is no better example than COVID-19 that a catastrophe can hit any one of us at any time. Sadly, we have only seen the beginning of business failures due to COVID-19. Many closely held small businesses have shut their doors never to re-open. Where does that leave the owners of those businesses? The answer may rest with whether they planned for a financial catastrophe or were just lucky.

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Bankruptcy Courts Mothballing of Rents Owed: Landlord’s Under Pressure

8/17/2020

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Author: Andrew M. Thaler

Chapter 11 reorganization allows the debtor to reject undesirable leases. If the debtor opts to reject the lease, the landlord is left with a breach of contract claim. In most instances rejection claims against the bankruptcy estate will be for less than the remaining rents under the lease as the claim is capped pursuant to the bankruptcy code.

Alternatively, the debtor can elect to assume the lease. Assumption requires the debtor to cure all prepetition defaults, including payment of all past due rents, on assumption. The debtor has 120 days, which can in certain circumstances be extended another 90 days, to assume or reject the lease. During the time debtor decides to assume or reject the lease, all post-petition obligations, including payment of rent must be paid. The court may “for cause” extend the time for performance of any post-petition rent, for up to an additional 60 days.

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EVENTS THAT ORIGINATED BEFORE A BANKRUPTCY IS FILED: WHAT POST-PETITION ACTION OR INACTION CONSTITUTES A STAY VIOLATION? WAGE GARNISHMENTS, SEIZURES, SETOFFS, DISCOVERY DEMANDS AND MORE

8/6/2020

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Author: Andrew M. Thaler

The filing of bankruptcy operates as an automatic stay of the enforcement of a judgment against the debtor or property of the estate, the commencement or continuation of litigation against the debtor, the taking of possession or control of property of the estate, and more. Creditors are often placed in a position of not knowing what to do when they learn that a debtor has filed bankruptcy. Some common scenarios are where, prior to bankruptcy, (i) a creditor seized the debtor’s vehicle, (ii) the Sheriff garnished and is holding debtor’s wages, or (iii) creditor’s counsel engaged in litigation have pending outstanding interrogatories, subpoenas, motions or other court hearings.

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May 2020 Bankruptcy Filings

7/2/2020

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Author: Andrew M. Thaler

According to data provided by Epiq, total commercial chapter 11 filings in May 2020 increased 48 percent from the previous year. Total consumer filings decreased 43 percent in May 2020.

According to American Bankruptcy Institute Executive Director Amy Quackenboss, “Companies that tried to shore up their balance sheets at the beginning of the year represent the initial wave of chapter 11s due to the economic crisis brought about by the COVID-19 pandemic… The CARES Act and other swift government measures have been successful in keeping consumers afloat during the crisis. As this relief runs its course, however, mounting financial challenges may result in more households and companies seeking the shelter of bankruptcy.”

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Proactive Creditors Can Prevent Debts Being Discharged in Bankruptcy

5/4/2020

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Author: Spiros Avramidis

Most individual debtors file bankruptcy expecting to discharge most, if not all, of their debts. There is, however, no absolute right to receive a discharge. Although a general discharge is granted in most filed cases, all debts are not necessarily discharged. Some debts cannot be discharged statutorily under Section 523. In those instances the creditor need not take any action. Certain other debts described in Section 523 are excepted from discharge, but only if the creditor brings a timely law suit—called an adversary proceeding—against the debtor. The lawsuit will seek a ruling from the court that the debt should not be discharged. A creditor with such a claim should be aware of their right to challenge discharge of their claim.

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Everyone Should Plan for a Financial Catastrophe

Author: Andrew M. Thaler

Bankruptcy Courts Mothballing of Rents Owed: Landlord’s Under Pressure

EVENTS THAT ORIGINATED BEFORE A BANKRUPTCY IS FILED: WHAT POST-PETITION ACTION OR INACTION CONSTITUTES A STAY VIOLATION? WAGE GARNISHMENTS, SEIZURES, SETOFFS, DISCOVERY DEMANDS AND MORE

May 2020 Bankruptcy Filings

Proactive Creditors Can Prevent Debts Being Discharged in Bankruptcy

Author: Spiros Avramidis

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