Creditors’ Rights, Business Bankruptcy and Receivership
All types of secured and unsecured business creditors, equipment lessors, real estate lessors, inventory and/or equipment financers, banks and other financial institutions, regularly call on KMKSC to represent and protect their interests and any collateral or leased assets in the hands of debtors, trustees or other adverse third parties. We also provide guidance to companies seeking to buy assets from a bankruptcy or receivership estate.
Our ability to operate on a national level and our “one-stop shop” resource allows us to assist our clients wherever the debtor or assets may be located.
Many times our consultation with our clients begins well before a debtor enters reorganization or liquidation proceedings.
The sale arrangements of an asset buyer may be formulated before the insolvency is filed, in such cases the insolvency proceedings become a vehicle to complete the sale. KMKSC will guide a client through the initial letter of intent through to the bankruptcy court order confirming the sale.
For secured and unsecured creditor and leasing clients, our experience and expertise in reorganization and liquidation proceedings enables us to formulate practices, procedures and alternatives to manage and control a client’s credit and loss exposure, and at the same time allow the client to continue to do business with the debtor. This may foster a successful financial reorganization of the debtor with an ongoing opportunity for our client to profit. If the debtor’s future leads to financial collapse, the client often is able to reduce the loss exposure.
Our assistance may focus on steps to minimize future potential preference claim exposure or steps to “fix” weak security documents or extend the collateralization of the debt through the implementation of real estate mortgages, security agreements, guarantees and letters of credit.
KMKSC has a reputation for pragmatic and efficient solutions. It recognizes that an out-of-court approach to resolving issues is preferred, to maintain ongoing cooperation from a delinquent party.
We are intimately familiar with the nuances of loan documentation and credit policies, and regularly make use of our detailed knowledge of remedies, debt restructuring techniques, and work-out transactions to obtain repayment of debt and recovery of collateral and leased assets.
When it is necessary to pursue judicial remedy, our attorneys are dedicated to providing clients with effective, efficient representation to enforce our client’s rights and to resolve any problem through accelerated court proceedings. We regularly make use of a wide range of creditor remedies, and know how to extract value from distressed financial situations.
Our services include traditional commercial collections (also see Receivables Management, Receivables Recovery and www.KMKcollections.com) as well as loan and lease documentation, work-outs and enforcement of mortgages via foreclosure, security interests via replevin and leases (see Loans and Leases).
Once a debtor moves into bankruptcy or other insolvency proceedings, we provide a full range of services for unsecured creditors, secured creditors and lessors.
Our unsecured creditor services include:
- Protecting and enforcing reclamation claims.
- Protecting and enforcing administrative claims—both arising from pre-petition sales under Bankruptcy Code Section 503(b)(9) (the “20-day administrative claim”) and post-petition transactions.
- Addressing “critical vendor” or “essential vendor” proposals and procedures.
- Defending objections to claims.
- Petitions to place a debtor in receivership.
- Involuntary bankruptcy petitions.
- Representation of creditors’ committees.
Our secured creditor services include:
- Proceedings to limit use of cash collateral.
- Post-petition financing arrangements.
- Relief from stay proceedings.
- Asset valuation proceedings.
- Asset sales.
- Plan confirmation and treatment of claim issues.
- Defense of lender liability or subordination claims.
For those clients involved in selling power, energy and other commodities, we advise them on enforcement rights and rights to unwind counterparty transactions and enforcement of forward contract merchant rights.
Our equipment and real estate lessor services include:
- Assumption and rejection of lease proceedings.
- Motions to compel prompt assumption or rejection of leases.
- Sufficiency of adequate assurance of future performance.
- Debtor assignment or sale of lease issues.
- Real estate lease § 502(b)(6) claim cap issues.
- Real estate lease § 503(b)(7) administrative claim cap issues.
- Equipment lease—disguised security agreement issues.
Services common to all types of clients include:
- Filing proofs of claim and defending objections to claims.
- Defense of preference claims (see preference claims).
- Consideration of proposed reorganization plans and objections thereto as appropriate.
- Negotiating and implementing a sale of a client’s claims to a claim buyer.
- Non-dischargeability actions.
- Denial of discharge actions.
- Motions to dismiss bankruptcy cases.
- Motions to convert reorganization case to Chapter 7 case.
- Equitable subordination issues.
- Fraudulent transfer claims.
- Actions against insiders.
- Prepackaged Chapter 11 cases.