A troubled company often reflexively perceives a bankruptcy filing as the prototype solution to its financial distress. Bankruptcy is an important and powerful tool to address insolvency—providing for an automatic stay, the sale of assets free and clear, confirmation of a plan over the objection of creditors, and discharge of debts.

A bankruptcy, however, has several limitations, including significant time and expense. Bankruptcy also frequently results in a sale or liquidation, as opposed to reorganization, and may involve protracted litigation. These drawbacks often render...

In February 2017, Strack and Van Til Supermarkets (SVT) retained the authors’ firm to address liquidity challenges and performance issues. Little did anyone appreciate at the time the severity of the issues the grocery store chain faced or that this case would become such a complex and multifaceted bankruptcy.

With nearly $1 billion in annual revenue, SVT operated 36 large supermarkets in the Chicagoland and Northwest Indiana areas under the well-known Strack & Van Til, Ultra Foods, and Town & Country banners. Founded in 1930, SVT successfully operated as an independent...

Six out of every 10 businesses are experiencing the same or higher levels of losses to online fraud compared with a year ago, according to “The 2018 Global Fraud and Identity Report” from Experian. Fraud was cited as a growing concern by 72 percent of businesses that participated in the study. Bankrupt companies are also three times more likely to be cited for fraud by U.S. regulators, according to a study from Deloitte Financial Advisory Services LLP.  That study indicated companies that experience fraud are much more likely than those that do not to land in Bankruptcy Court.

Many...

In a typical Chapter 11 bankruptcy case, the initial terms of a debtor-in-possession (DIP) financing arrangement likely include a provision granting the DIP lender a lien on the bankruptcy avoidance actions and/or the proceeds of such actions, and one of the first things a committee of unsecured creditors does upon its appointment by the U.S. Trustee is to challenge such a provision. Usually, a negotiation ensues, and the DIP lender, which has obtained other liens and claims against the debtors in connection with the DIP financing, allows the avoidance actions and/or the proceeds thereof...

“It is a longstanding principle of American law ‘that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States.’”1


A number of cases involving avoidance actions have been brought against overseas defendants in recent years. Several legal doctrines apply in such circumstances, including the doctrines of international comity and extraterritoriality. This article focuses on extraterritoriality.2 Although the U.S. Supreme Court has articulated a seemingly simple...

Despite the strong stock market performance and the low interest rate environment, financial distress, as measured by the number of Chapter 11 bankruptcy filings, is gradually increasing in both general Chapter 11 and real estate. The exception to this “gradual” increase is in healthcare, which has seen filings spike to record-high numbers filings over the past two years, as documented in the Polsinelli/TrBk Distress Indices.

Some reasons for the increased distress in healthcare are obvious, such as those related to a new regulatory and economic environment created under “Obamacare...

The average duration of large, public company bankruptcies has fallen sharply since the financial crisis. Remarkably, it took just over seven months in 2017 to administer a case.1 While this trend lowers costs and provides other benefits to the bankruptcy estate, it means that unsecured creditors must act quickly to protect their interests. The rapid pace affords little time for the investigation, development, and prosecution of avoidance and other causes of action, or the negotiation and settlement of claims against the bankruptcy estate. Yet it’s these very efforts that often...

Section 546(e) of the U.S. Bankruptcy Code limits the avoiding powers of trustees and debtors in possession.1 Often called the “safe harbor provision,” the purpose of the limitations, as expressed in the legislative history accompanying the 1982 amendment that added this provision to the Bankruptcy Code, is to protect the commodities and securities markets from disruption or displacement from a major bankruptcy affecting those industries.

Section 546(e) protects transfers from avoidance as unperfected or statutory liens, preferences, or constructive fraudulent conveyances...

A customer’s bankruptcy often results in a sharp reduction to the value of the receivables owing from the customer. However, in addition to the drop in asset value, there can also be further liability when the bankruptcy trustee later demands the return of a significant amount of money that the trustee claims was paid to the company as a “preference.” The trustee may take pains to advise that the company did nothing wrong, but, nonetheless, will demand that the company return a large sum to the trustee in short order or face suit for its recovery. Often, the trustee seeks a quick...

U.S. Bankruptcy Code Section 363 asset sales have become a favored bankruptcy alternative to the traditional Chapter 11 reorganization. One big reason is perceived cost savings. Because Section 363 sales generally are concluded much sooner than confirmation of a Chapter 11 plan, the associated costs are seen to be much lower.

Judged by recent bankruptcy filings, the retail industry clearly shares this view. Many retailers enter Chapter 11 with a quick asset sale exit in mind. If, however, their secured lenders think that the bankruptcy sale process will be significantly less costly...