Creditors' Rights Law
Common Sense, Experience, Hard Work and Good Communications
Whether a matter involves any form of bankruptcy proceeding, including complex Chapter 11 cases, the enforcement of creditors’ rights and remedies in state court, the defense of lender liability claims, troubled debt restructures, real property foreclosures, land title disputes, realizations upon personal property collateral under Article 9 of the Uniform Commercial Code, or any combination of these proceedings, we have the knowledge and experience to protect our clients' interests and to assist our clients in achieving their business objectives. Senior secured debt, sub-debt or unsecured debt, we bring years of experience and good judgment to any matter.
Melding extensive experience, business acumen and litigation savvy with a sense of balance and proportion, we produce timely results, with effective client communication and optimum recoveries in judicial proceedings and non-judicial workouts.
Our Services include:
- Enforcement of creditors’ rights, secured and unsecured, senior and subordinated debt, in judicial proceedings and non-judicial workouts
- Resolution of lender liability claims and defenses to enforcement actions
- Specialized representation and services in all phases of bankruptcy proceedings, including prosecuting claims, defense of avoidance actions, debtor-in-possession financing, management of secured creditors’ interests
- Protection of commercial lessors’, licensors’ and franchisors’ rights
- Negotiated debt restructuring
- Foreclosure of real estate mortgages, mechanic’s liens and personal property replevin or liquidation
- Litigation of land title disputes and lien priority claims
- Litigation of fraudulent transfer and constructive trust claims
Our client held a multimillion-dollar mortgage on a piece of real property, which property was tied up in an aborted devel- opment project. The borrower was facing bankruptcy and a long list of mechanic’s liens had been filed against the subject property. Our client had the opportunity to see the property redeveloped by another party, if only the mechanic’s liens could be quickly resolved, and bankruptcy by the borrower avoided. We carefully analyzed each party’s position, and were successful in creating an exit strategy for all concerned. In less than the time it would have taken to remove the property from a bankruptcy proceeding and to foreclose the client’s mortgage on the property, our client was able to obtain title and convey the property to a new developer, who has since completed a successful major redevelopment project at the site.
In the arena of international trade finance, we represented our lender client in the mediation of a multimillion-dollar trade contract dispute, playing a lead role in the negotiations between the foreign government buyer and the U.S. exporter. Our MERITAS™ affiliation proved invaluable as an aid in addressing the multi-national and multi-disciplinary issues attendant upon doing business in the new global economy, providing us with immediately available international resources concerning not only the law, but also foreign cul- ture, government, customs and practices.
One client was a secured lender to a major manufacturer of unique materials used in the construction industry. Unfortunately, the materials sold by the borrower included a product that was the subject of several major liability claims, which claims threatened to destroy the entire company, taking our client’s secured loan with it. With our guidance and advice, our client was able to work creatively with the borrow- er, the result of which was the filing of a Chapter 11 bank- ruptcy proceeding, with the consent of our client. In that proceeding, we assisted our client in nurturing a successful Chapter 11 reorganization plan, during which proceeding our client provided a funding source for on-going operations and ultimately received payment in full of its multimillion-dollar loan, including all costs and legal expenses. The borrower was able to obtain confirmation of its plan of reorganization and successfully exit bankruptcy.
In another matter, our client was the secured lender to a major construction company. Unfortunately, the nature of the col- lateral was such that it was not “liquid”, although the loan had matured. Using a combination of selected litigation proceed- ings, careful negotiations and development of an exit plan, the client received a full payout of its indebtedness, at a premium interest rate, together with all fees and expenses.
Of course, your case will be decided on its own facts and merit, and we can not imply that our previous successes will result in winning your case.
Title insurance often plays a key role in a commercial real estate transaction. In one matter, a borrower filed a Chapter
11 bankruptcy proceeding, where the priority of the client’s lien was called into question. In conjunction with the title insurance company, we were able to successfully challenge the borrower’s proposed plan of reorganization that would have effectively wiped out our client’s lien. The result was a multi-party negotiated resolution of the dispute, the effect of which was to preserve our client’s lien status.
Asset based lending continues to be a major form of commercial finance. One client’s collateral consisted of manufacturing equipment and inventory, export receivables and certain real estate. While the collateral base appeared to adequately cover the client’s debt, the borrower was rapidly reaching the end of its ability to remain in operation. An immediate closure of the business however, would have been detrimental to our client’s recovery potential. Working closely with the borrower and our client, we crafted an amendment to the existing loan documents that served to bridge the gap in time necessary for the borrower to liquidate its non-real estate assets on a favorable basis. We preserved the client’s right to look to the real property to recover any deficiency that resulted.
Even Chapter 7 proceedings can provide a major challenge for a creditor. In one case our client was a judgment lien creditor and was faced with a lien avoidance action under the provisions of the Bankruptcy Code. In a case of first impres- sion, we were able to defeat the debtor’s efforts to wipe out our client’s judgment lien and argued for an interpretation of the Code that was ultimately adopted by the Bankruptcy Court in its decision, thereby preserving the bulk of the value of that lien.
The bulk purchase or sale of secured debt is a common transaction these days. In one matter, our client (who had purchased troubled debt) was a secured creditor in a Chapter 11 bankruptcy case where the validity and enforceability of its mortgage was being challenged in an adversary proceeding. In addition, the debtor-in-possession was attempting to “prime” our client’s mortgage with unfavorable DIP financing. In yet another related state court proceeding, we pursued the guaran- tors who responded with a number of lender liability defenses. We were able to defeat the priming lien motion, gain the upper hand in the adversary proceeding and, during jury selection in the state court action, were able to reach a global settlement that resulted in our client achieving a profitable recovery on this purchased troubled debt.
One client was a secured creditor in a Chapter 11 bankruptcy case, who held a first priority mortgage on valu- able real estate and a second priority lien on the debtor’s machinery and equipment. The debtor could not remain in business and was faced with the reality of having to close its doors for good in a short period of time. We were able to suc- cessfully argue for court approval (over objection of the com- mittee of unsecured creditors) for the sale of substantially all of the assets of the debtor within two months of the filing of the bankruptcy petition. We negotiated the terms of the sale, the most important aspects of which provided that the assets transferred to the purchaser remained subject to our client’s liens, and for the purchaser’s assumption of the debt owed to our client. Our client’s secured position improved substantially following the transfer, as it not only retained its first mortgage position on the real estate, but also moved into a first priority position on the machinery and equipment, the value of which alone substantially exceeded the outstanding loan amount.
Brian C. Courtney
Rod W. Farrell
Paul N. Gilmore
Evan S. Goldstein
Thomas A. Gugliotti
Bonnie D. Kumiega
Ellen S. Levine
Adam B. Marks
Robert J. Martino
Kevin J. McEleney
Edward J. Pontacoloni
R. Alisha Verdone
Thomas J. Welsh