Bankruptcy and Reorganization
At more than 530,000 words, the U.S. Bankruptcy Code and the Federal Rules of Bankruptcy Procedure are roughly the same length as the Tolstoy’s War and Peace. And every year, 350 judges take on a million new bankruptcy cases, providing tens of thousands of opinions that further expand that universe of knowledge. When business interests collide with the world of bankruptcy, expertise is essential – and Kolesar & Leatham has one of the largest, most experienced bankruptcy practice groups of any law firm in Nevada.
Identifying Business Solutions
We begin every engagement by determining for each client a range of possible outcomes and charting a path to achieve an optimal business solution, whether in or out of bankruptcy court. As conditions inevitably change, we continue to work with clients to identify opportunities to maximize outcomes.
Most businesses enter the bankruptcy realm when a struggling borrower, customer, lessee, or contract counter-party seeks debt relief. For secured creditor clients, our goals may involve the recovery of collateral by seeking relief from the automatic stay or compelling debtors to offer “adequate protection” payments during the pendency of their case. Alternatively, we may look to maximize returns by compelling a sale of collateral within a bankruptcy proceeding.
When creditors lack collateral, our focus may shift to maximizing distributions through a plan of reorganization or compelling the liquidation of unencumbered assets.
We have represented creditors in a variety of industries, including:
- Commercial Laundry
- Gaming and Hospitality
- Golf Courses
- Health Care
- Intellectual Property
- Mortgage Servicing
- Real Estate Development
Lessors face particular challenges as the only creditor in bankruptcy that is often forced to involuntarily extend credit in the early stages of a case when a debtor refuses to pay rent, taxes, or common area maintenance charges. We assist lessor clients by compelling compliance with lease documents while preserving non-monetary interests, including such things as maintaining proper tenant mixes and observing use restrictions.
When a debtor is a counter-party to an agreement requiring future performance, we recognize that uninterrupted performance is often critical, and we act to ensure that non-debtor parties to an agreement are not adversely affected by a filing.
In larger Chapter 11 cases, the Office of the U.S. Trustee will typically appoint a committee to represent the interests of the entire class of unsecured creditors. We have acted as counsel to creditors’ committees in cases in a number of industries, including the official committee of unsecured creditors of the Lucky Dragon. By acting collectively through a committee, unsecured creditors can often exercise considerable control over the outcome of a reorganization proceeding, with debtors typically assuming responsibility for payment of fees.
For enterprises seeking relief as a debtor, whenever possible, we concentrate on revitalizing businesses and optimizing the potential for success after reorganization.
We have successfully guided businesses through Chapter 11 in industries that include:
- Real Estate
- Health Care
- Golf Courses
On the other hand, sometimes market conditions render a reorganization impracticable, and in these instances, we can assist businesses with the orderly liquidation of assets.
Our Firm’s multidisciplinary approach to insolvency cases is perhaps most obvious when representing parties in business transactions occurring in bankruptcy proceedings. When a debtor seeks to compel the sale of an asset within a bankruptcy case, we often represent secured creditors and act to ensure that they are receiving full value for their collateral and timely distribution. On the other hand, we also represent purchasers of assets in bankruptcy cases, who are often concerned with details beyond price, including ensuring that assets are conveyed “free and clear” of interests. We represent lenders in connection with “Debtor-in possession financing” who are often focused on lien priority. Our corporate, mergers & acquisitions, securities, real estate, and title lawyers are all available to provide input on complex transactions occurring within a reorganization setting.
We often represent businesses that find themselves involved in lawsuits occurring within a reorganization, even if no debtor-creditor relationship may have existed. We represent trade vendors alleged to have received “preference” payments prior to a filing, and we represent directors, officers, shareholders, and other insiders alleged to have received “fraudulent” transfers.
Finally, and perhaps most importantly, our depth of experience allows us to recognize when the best option for dealing with insolvency issues calls for remaining outside bankruptcy court. We often represent parties in out-of-court workouts, including in industries in which federal law may not allow for access to the Bankruptcy Court, such as cannabis. For lenders, we have a very active practice in our State courts involving receiverships.