Kodak’s Rejection of Naming Rights Approved

17 February 2012 by Kelly G. Black  |  Reject Leases  |  No Comments

The bankruptcy judge overseeing Kodak’s Chapter 11 case has approved its rejection of naming rights in the Kodak Theatre. Kodak’s attempt to reject had been opposed by the landlord, which argued that the contract was a one-time deal which it had substantially performed, rather than an ongoing (“executory”) contract in which both sides have continuing obligations. Only executory contracts can be rejected in bankruptcy. The best the landlord could do was to point out that much of its expense, and much of the benefit to Kodak, came in the early years, when the link between “Kodak” and the theater was…

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Foreclosures Increase Again

16 February 2012 by Kelly G. Black  |  High Income High Debt, Individuals and Businesses, Reduce and Modify Secured Debt, Uncategorized  |  No Comments

Foreclosures have recently increased again. Individuals who are facing the loss of their home may be able to come current on their mortgage in a bankruptcy reorganization. Those whose debts exceed Chapter 13 limits may want to consider a Chapter 11 bankruptcy. Similarly, both individuals and businesses with investment property at risk may be able to reduce and modify their secured debt in a Chapter 11 bankruptcy. If you are considering requesting Chapter 11 bankruptcy protection, you should consult with an attorney familiar with Chapter 11 bankruptcies to discuss your options. For a free consultation, call (480) 719-1152.

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Washington Mutual Faces the Absolute Priority Rule

16 February 2012 by Kelly G. Black  |  Absolute Priority Rule, Consenting Impaired Class, Plan of Reorganization  |  No Comments

A Chapter 11 bankruptcy involves creditor consent much more than in other chapters. At least one class of affected creditors is required to confirm a plan. However, a class of affected creditors can also approve treatment which the Code would otherwise prohibit. For example, creditors and shareholders in a bankruptcy case are paid in order of priority. If there are not enough assets to pay the company’s debts in full, junior creditors and owners get paid only if all senior classes are paid in full. However, Chapter 11 allows debtors and creditors to get around the “absolute priority rule” IF…

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Chapter 11 Season for Car Wash Companies

9 February 2012 by Kelly G. Black  |  Plan of Reorganization, Reduce and Modify Secured Debt, Relief from Creditors  |  No Comments

It appears to be the season for Arizona car wash companies to file for Chapter 11 bankruptcy. Last week, Metro Car Wash of Tucson filed for bankruptcy protection. Just a few weeks ago, the owner of the Valley’s own Danny’s Family Car Wash had its plan of reorganization confirmed. A common motivating factor for car wash companies, as with many businesses seeking Chapter 11 relief, is to reduce or modify secured debt. The owner of the Metro Car Wash said his company’s aim was “to reamortize some loans to increase our cash flow month-to-month.” If you are considering requesting Chapter…

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Chapter 11 Hits the Dating Circuit

6 February 2012 by Kelly G. Black  |  Individuals and Businesses  |  No Comments

The Huffington Post recently ran a column entitled: Bankruptcy And Dating: Should You Go Out With Someone Who’s Filed Chapter 11? Despite its title, the article has nothing of substance to say about Chapter 11. It instead offers advice about whether and how to date someone who has filed for bankruptcy. Although the article does not mention individuals filing Chapter 11, the term does appear in the title, inspiring one commenter to state: “individuals cannot file Chapter 11.” To the contrary, individuals in fact can file Chapter 11 bankruptcy. I will pass on the temptation to review the dating advice…

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Kodak Rejects Contract for Kodak Theatre

3 February 2012 by Kelly G. Black  |  Reject Leases  |  No Comments

The Bankruptcy Code gives a Chapter 11 debtor the right to reject leases and certain other contracts. This right is especially useful when the ongoing cost to the debtor outweighs the contract’s benefits. In its Chapter 11 bankruptcy case, Kodak has recently filed a motion to reject the  contract that allows the Kodak Theare to use the Kodak name. Kodak’s motion states that it pays “a significant annual fee” — which it does not specify — for the right to keep “Kodak” in the theatre’s name. Kodak could have opted to keep the rights or try to sell them, but its…

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What Is a Preference?

2 February 2012 by Kelly G. Black  |  Preference  |  No Comments

In bankruptcy, all creditors are treated alike. If a creditor receives more than a pro rata share within 90 days before bankruptcy, the payment could be a preference, which can be recovered. Payments to insiders can be recovered as preferences if made within one year before the bankrutpcy. The same rule applies with payment is made voluntarily, involuntarily, or even eagerly. Call for a free consultation at (480) 719-1152.

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Before You File, Evaluate Preferences

2 February 2012 by Kelly G. Black  |  Preference  |  No Comments

Small business owners considering a Chapter 11 bankruptcy filing should request an analysis of potential preference claims. These are potentially a double-edged sword: they may provided a needed source of funds, but the owners themselves may end up as the defendants. If you are considering requesting Chapter 11 bankruptcy protection, you should consult with an attorney familiar with Chapter 11 bankruptcies to discuss your options. For a free consultation, call (480) 719-1152.

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Getting MF Global’s Money Back

1 February 2012 by Kelly G. Black  |  Fraudulent Transfer, News, Preference  |  No Comments

MF Global may recover some assets under preference, fraudulent transfer, or state law theories. However, at least some innocent clients and payees will end up losing.

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Chapter 11 Benefits American Companies

26 January 2012 by Kelly G. Black  |  Continued Control, Eliminate Debt, News, Relief from Creditors, Run Business  |  No Comments

USA Today is running an article contrasting US reorganizations under Chapter 11 with foreign bankruptcy and insolvency law. In general, a Chapter 11 case allows management to retain control and run a business under the protection of the bankruptcy court, while proposing a plan to reduce or restructure its liabilities. While US law also allows liquidation, many other countries allow only liquidation, or sometimes a very restricted restricted reorganization. NASDAQ states that Chapter 11 provides American companies a competitive advantage. If you are considering requesting Chapter 11 bankruptcy protection, you should consult with an attorney familiar with Chapter 11 bankruptcies…

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