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News
Financial Services
[07/03]
Hedge fund scammer tells NY judge he tried suicide
[07/03]
ECB raises benchmark rate to 4.25 pct
[07/03]
Paulson: no quick fix for oil price
[07/03]
Indiana hopes low-interest loans will help farmers
[07/02]
Paulson: overhaul bank regulations
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Articles
Bankruptcy
Company Bankruptcy: What to Expect
What you can expect when filing bankruptcy depends, in part, on what type of bankruptcy your company files. Here is an overview of what to expect under the three chapters available to businesses.
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Commercial Bankruptcy
Just as individual consumers do, businesses sometimes find themselves in the uncomfortable position of being unable to pay their debts in a timely manner. In many cases, the solution to this dilemma is to declare bankruptcy, a legal proceeding in a federal court that releases the business from the obligation of paying all or some of its debts. Filing bankruptcy is not a perfect solution, however. Although it is often said that bankruptcy gives a business a fresh start, it can negatively affect the business's credit rating and make it hard to obtain credit in the future. Without good credit, it may be impossible to continue in business. On the other hand, in some types of bankruptcies the bankrupt business actually ceases to exist when the proceedings terminate.
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Case Summaries
Bankruptcy Law
[07/03]
Gen. Elec. Capital Corp. v. Future Media Prods., Inc. In an appeal brought by an oversecured creditor in a bankruptcy matter, an order denying the creditor default interest and attorney's fees is reversed and remanded where: 1) the bankruptcy court improperly applied the circuit court's rule from In re Entz-White Lumber and Supply, Inc., 850 F.2d 1338 (9th Cir. 1988), to the facts of this case; and 2) the bankruptcy court should apply a presumption of allowability for the contracted for default rate, "provided that the rate is not unenforceable under applicable non-bankruptcy law."
[07/01]
Donell v. Kowell In a suit arising to recover gains made by defendant, an innocent investor, from a Ponzi scheme, a judgment requiring him to disgorge his profits as fraudulent transfers under the Uniform Fraudulent Transfer Act is affirmed where the circuit court: 1) adopted the largely uniform analysis used for applying the UFTA to allow recovery from investors in a Ponzi scheme, and describes a two-step process for determining the existence and amount of liability; 2) found there was no error in the district court's application of such analysis; 3) rejected arguments that courts should not be allowed to require innocent investors to disgorge net profits; and 4) declined to permit good faith investors to claim offsets for taxes or other expenses paid in connection with receipt and management of income from a Ponzi scheme.
[06/26]
Chase Manhattan Mortgage Corp. v. Shapiro In bankruptcy proceedings, judgment rejecting a bankruptcy court's decision that the earmarking doctrine did not apply to a new mortgage as a preferential transfer and that the estate was diminished by the perfection of the new mortgage is reversed where: 1) the trustee established the elements of an avoidable preference set forth in section 547; 2) plaintiff was not a "new creditor" which precluded it from invoking the earmarking doctrine since it refinanced its own loan with debtor; and 3) the lapsed perfection of the original mortgage and plaintiff's late perfection of the new mortgage diminished debtor's estate.
[06/25]
AG Capital Funding Partners v. State Street Bank and Trust Co. In an action alleging breach of contract, violation of federal Trust Indenture Act, breach of fiduciary duty, and negligence based on defendant's alleged failure to deliver debt transaction registration statements required to secure a debt, the court of appeals finds that: 1) plaintiffs' contract and Trust Indenture Act claims were barred by a release previously executed by plaintiffs as part of a bankruptcy settlement and that no fiduciary duties existed; however; 2) because negligence claims were not barred by the release and there were issues of fact as to whether defendant owed and violated a duty of care, plaintiffs' cause of action for negligence is reinstated.
[06/25]
Tidewater Fin. Co. v. Kenney In a Chapter 13 bankruptcy proceeding, an order confirming the debtor's Chapter 13 bankruptcy plan is reversed and the case remanded for further proceedings where: 1) the parties are left to their contractual rights and obligations and a creditor may pursue an unsecured deficiency claim under state law after a debtor satisfies the requirements for plan confirmation under section 1325(a)(5)(C) by surrendering his 910 vehicle; and 2) the circuit court joints the Seventh Circuit Court of Appeals in further recognizing that such unsecured debt need not be paid in full any more than other unsecured debts, but it cannot be written off in toto while other unsecured creditors are paid some fraction of their entitlements.
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