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A Case for Fewer First Day Motions

A Case for Fewer First Day Motions

September 18, 2020

Authored by: Timothy Bow

Chapter 11 petitions usually are accompanied by a panoply of first day motions.  A newly-minted chapter 11 debtor needs to be able to—among other things—pay its employees and continue employee benefits in the ordinary course of business, pay certain prepetition claims, satisfy its obligations to taxing authorities, and maintain its insurance and surety bond programs.  Chapter 11 cases often are also accompanied by motions seeking various forms of procedural relief, including joint administration of multi-debtor cases, relief related to consolidation of the debtors’ creditor matrix and noticing, and a motion seeking additional time within which to file schedules and statements.

Despite the usually large number of first day motions, these motions generally are divided into two buckets:  motions seeking to pay things and motions seeking procedural relief.  It may be then that many of these first day motions are simply extra paper—a small portion of each motion recites a few

Maximizing the Value of Mediation During the COVID-19 Pandemic and Beyond

Perhaps the most obvious shift in day-to-day legal practice in the midst of the COVID-19 pandemic is the “new normal” of virtual meetings and court proceedings.  While these can present some degree of challenge, video conferencing mediation instead of face-to-face mediation is perhaps one of the most challenging

This post sets forth fundamental tips to navigate a virtual mediation – and importantly – provides a reminder that many of the aspects of a successful mediation remain constant even during a time when so much of daily life feels variable.

Preparation:  Several elements should be considered and discussed when preparing for a mediation session in order to achieve the most successful result.

  • Goals: Consider and understand your goals.  Clients and their counsel often discuss economic goals and alternatives, but should also identify non-economic sources of value.   Sources of non-economic value may open up ways of satisfying opposing parties’ goals.  For

Part III: Supplier considerations: Assessing and leveraging your leverage

As most global markets attempt a return to normal (or a new form of normal) business, it is hard to imagine a sector or an industry that isn’t already reeling from the effects of the past three months. Getting back on your feet is hard enough in the current environment, without having to worry about further setbacks impacting your business. But how would you react if your key supplier called tomorrow to let you know that they were insolvent and unable to provide you with goods or services? Worse, what if you had already placed (and paid for) a large order with them that was critical to your ability to continue business?

In addition to the customer risk mitigation measures we looked at in Part II of this series, management needs to have in place systems and options to avoid the impact of supply-chain risk. Continuously monitoring your supply chain is

Managing Counter-Party Risk in the Pandemic

Part II: Customer Considerations: Risk Mitigation = Smarter Sales

In the coming months, very few companies, whether public or private, will be able to avoid including statements in their quarterly reports or financials that attribute single or double digit percentage declines in revenue to doubtful accounts and insolvencies of major customers caused by the pandemic. For many, if not most, that disclosure will continue beyond Q4 of 2020 and through 2021.

In prior periods, lenders and other key stakeholders may have been tolerant to these one-off, non-systematic declines due to unanticipated insolvencies of customers (and the ability to replace the revenue/income either through liquidation of collateral or replacement of customers). After all, none of us have a crystal ball, and many of the insolvencies were unforeseen (or unexpected). To the extent they had it, lenders and other creditors didn’t have to worry about being able to liquidate collateral – a market

Managing Counter-Party Risk in the Pandemic

Part I: Getting on the Same Page

Globally, boards and management teams are taking stock of current operations and finances to identify vulnerabilities to the unprecedented distress that markets are anticipating from the pandemic for the next 12-18 months.  As part of those discussions, many retail businesses (and those with operations related to retail, like landlords, logistic companies, shipping interests, etc.) are focusing on receivables and risk weighting as to the collectability and the follow-on impact of doubtful accounts.

These conversations will inevitably lead to the age-old conflict that pins finance and legal functions – that are largely focused on risk – against business/sales functions, which are generally focused on sales and keeping customers happy.  Pre-pandemic, sales teams historically had a leg up as revenue generation inevitably trumped risk mitigation in the context of strategic decisions.  However, the same behavior and cultures that have been allowed to prevail when there

Redefining Extraordinary Circumstances in the Wake of COVID-19: Finding Consistency in Difficult Times

Editor’s Note:  This was originally published in CFO.com on April 21, 2020.

Humanity has largely embraced the “we are in this together” mentality from a health crisis perspective. Yet, even as world leaders scramble to contain the COVID-19 pandemic, we have yet to fully grasp the follow-on impact from the pandemic and particularly, how it will affect world economies. For this “second phase” of the world’s response to the pandemic, the ultimate question is whether business and financial counter-parties will equally share the risk of loss. Bankruptcy judges have jurisdiction to fashion remedies for parties in their courtroom, but Congress and COVID-19 have left them no choice but to rule on issues immediately in front of them without the ability to limit the impact of their decisions on other market players. With a goal of tempering the COVID-19 related damage, recent difficult decisions in U.S. Bankruptcy

Coronavirus: UK’s first judgment on the Job Retention Scheme – the Carluccio’s administration

April 17, 2020

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On Monday 13 April 2020, the High Court released its judgment in the United Kingdom’s first case relating to the government’s recently announced Coronavirus Job Retention Scheme (“CJRS”).

The case considered the use of the CJRS by the Administrators of Carluccio’s Limited (“Carluccio’s”). Due to Carluccio’s being in administration, it was heard by the High Court as a matter of urgency.

The case raised several important points because the government had only outlined the CJRS in broad terms, nor has it detailed the way the CJRS interacts with existing insolvency legislation.

This blog deals with the administration and insolvency issues as well as the employment law implications regarding employees impliedly consenting to changes to their terms of employment.

Facts

  • Carluccio’s entered administration subsequent to the imposition of the government’s ‘lockdown’ measures aimed at reducing the spread of COVID-19.
  • The Administrators’ current strategy is to “mothball” Carluccio’s whilst it seeks

Just File Your Notice of Appeal!

Generally, a notice of appeal of a bankruptcy-court order must be filed “within 14 days after entry of the judgment, order, or decree being appealed.” Fed. R. Bankr. P. 8002(a)(1). But what if a litigant’s motion for attorneys’ fees or costs incurred in connection with the judgment remains pending on the fourteenth day after entry? The First Circuit recently answered this question unequivocally: File the notice of appeal!

In In re Empresas Martínez Valentín Corp., No. 18-2103, 2020 U.S. App. LEXIS 2701 (1st Cir. Jan. 28, 2020), creditor PC Puerto Rico (“PCPR”) filed its notice of appeal 237 days after the fourteen-day deadline, waiting for the bankruptcy court to decide the Debtor’s motion for attorneys’ fees and costs incurred in litigating the adversary proceeding to judgment. PCPR argued that the notice of appeal was timely because: (i) the time for appeal did not begin until

Death of the Bob Richards Rule?Supreme Court Limits Federal Common Law ( Rodrigues v. Fed. Deposit Ins. Corp.)

February 25, 2020

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When can a Federal Court employ a federal common law rule to make its decision in the case?  Justice Gorsuch answer this in Rodriguez v. Fed. Deposit Ins. Corp., U.S., No. 18-1269, 2/25/20.[1]  The answer . . . less often than you might think.

Leave it to a bankruptcy case to stir up Supreme Court worthy controversy over who exactly reaps the benefit of a whopping $35,351,690 operating loss.  In this instance, that controversy resolved a circuit split and gives us clear guidance on when federal common law can be employed and when a court should stick to state law.

The controversy arose between Simon Rodriguez (Trustee), the court appointed Chapter 7 Trustee for United Western Bancorp, Inc. (UWBI), which was a bank holding company, and the Federal Deposit Insurance Corporation (FDIC), the receiver for United Western Bank (the subsidiary Bank) over a $4,846,625 tax refund.[2] 

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