Creditors’ Rights

Brody Wilkinson’s Business Group advises clients in a wide spectrum of creditors’ and debtors’ rights and asset protection matters. In these areas, our diverse client base includes financial institutions, private lenders, manufacturers, service providers, retailers, professional practices, health care businesses, real estate developers, equipment lessees and lessors, charitable organizations and individuals.

We counsel creditors regarding their rights and potential liabilities with respect to secured and unsecured debt and the relative priority of their liens in collateral shared with other creditors in order to achieve maximum recovery. We have extensive experience representing creditors on corporate restructurings, collateralization of debt, inter-creditor and subordination agreements, loan workouts, sales of collateral, general and limited guarantees, contribution and indemnity agreements, warehouse waivers and landlord waivers, collateral account control agreements, insolvency matters and entity dissolutions.

Our attorneys assess insolvency strategies available to debtors. Bankruptcy is often the first remedy that comes to mind when a business faces insolvency. However, bankruptcy is a tool of last resort. Therefore, we counsel clients on whether bankruptcy, entity reorganization, receivership or state dissolution procedure is the most effective method to obtain debt relief. To help clients understand their rights, we perform a comprehensive review of applicable documentation including contracts and loan documents and all related amendments, waivers and consents, due diligence materials and current financial statements. As part of our analysis, we assess the value of any collateral security in order to evaluate what a creditor’s actual recovery will be in a bankruptcy or other proceeding. This information allows us to set realistic goals to effect an out-of-court workout. Our attorneys have successfully negotiated many workouts and settlements in non-litigation environments.

We also provide a full range of general services in other creditor- and debtor-related areas such as advice regarding the benefits and risks associated with the acquisition of real property, equipment and other assets from distressed and insolvent businesses. In this regard, we draw upon the capabilities of the firm’s Real Estate Group when necessary. Additionally, in collaboration with the firm’s Trusts & Estates Group, we offer sophisticated asset protection and tax planning services and sometimes work closely with a client’s accountant to provide comprehensive solutions.

Our attorneys routinely handle matters for creditors and debtors related to:

  • Asset protection strategies including entity formation, trust creation & asset transfers & licensing agreements
  • Defense of bankruptcy preference claims
  • Distressed asset acquisitions
  • Entity dissolution procedures (under state statutes)
  • Fraudulent conveyance claims
  • Inter-creditor arrangements
  • Lender liability
  • Lien priority & effectiveness
  • Loan participations
  • Loan workouts & restructuring
  • Receiverships
  • Reorganizations & restructurings
  • Title matters

Representative matters include:

Representation of a lender in connection with the extension of more than $25 million of secured credit facilities, a portion of which was used to finance the borrower’s acquisition of certain assets, and the related subordination of $10 million of seller financing which was also secured by the assets being acquired by the borrower.

Representation of a manufacturing company in connection with a forbearance agreement with a municipal lender which enabled the borrower to obtain more than $3 million of secured credit facilities to refinance its existing non-performing loans and provide it with needed working capital.

Representation of the owner of a shopping center in connection with the refinance of a $5 million nonperforming mortgage loan, pursuant to which the loan was bifurcated into two separate loan facilities in order for the borrower to be compliant with the lender’s loan to value and debt service covenants.

 

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