Just because a company files for bankruptcy doesn’t mean they can’t be a source of new business. Scott Greer, Matthew Warren and Jacob Jumbeck of King & Spalding explain what lenders should focus on when determining how to proceed with such debtors, using McDermott International’s recent Chapter 11 filing as an example.
Companies in bankruptcy do not have access to the Paycheck Protection Program, at least according to the letter of the law. However, the issue has become less clear as illustrated by the decisions in In re Hidalgo and In re Cosi Inc. Howard M. Berkower and Franklin Barbosa Jr. of McCarter & English take a closer look at those decisions and how their inconsistencies muddy the waters.
In the third episode of ABF Journal’s COVID-19 focused podcast, Jeffrey A. Wurst said he expects an uptick in bankruptcy filings from mainstream middle market companies and a return to “old fashioned bankruptcy.”
Placing goods on consignment is a common occurrence in retail, but to perfect those goods, consignors are required to file with the UCC and give notice to other secured parties. Many consignors fail to follow this procedure and end up as unsecured creditors if the retailer files for Chapter 11. Stephen Selbst argues it is time to change the law.
Despite DIP financing from Wells Fargo, a distraught Vitamin World is heading for liquidation. ABF Journal illustrator Jerry Gonzalez shows the company getting a little help from its friends at SSG Advisors.
In the world of bankruptcy, the definition of “consignment” is not as simple as it would seem. In the ongoing Sports Authority bankruptcy case, the company is trying to remain afloat by selling merchandise it obtained on consignment. The consigners, of course, want to be paid, as do the company’s lenders. Judge Cyganowski reviews the case, which has not yet been resolved, and explains the complexities of consignment.
Although a parade of Chapter 11 filings by major retailers grabbed the headlines in 2017, Samuel Gerdano and Ed Flynn of the American Bankruptcy Institute point out that, overall, large company filings were down compared to the previous two years. They predict 2018 will offer more of the same.
Chapter 11 in 2017 seemed to be a paradox. On one hand, every day seemed to bring news of a national retailer filing for protection. On the other hand, the American Bankruptcy Institute, which monitors Chapter 11 commercial filings, contends that there were fewer filings because of the high cost. The Honorable Michael B. Kaplan, U.S. Bankruptcy Judge for the District of New Jersey, provides unvarnished answers to ABF Journal’s questions about the state of Chapter 11 today.
The American Bankruptcy Institute reported December Chapter 11 filings were 699, up 107% from the previous year. Calendar year 2017 Chapter 11 filings were 5,744, a 6% increase from 5,447 filings in 2016.