Practices: Creditors' Rights and Bankruptcy Litigation

Few events are a bigger threat to your business interests than insolvency or bankruptcy. Conversely a bankruptcy case can create a business opportunity with significant strategic implications for you. If you’re a creditor, you want your claims protected or paid promptly so that you’re not at the mercy of the bankruptcy process. You want the debtor to stay viable long enough either to pay off its debts, reorganize or liquidate its assets. If litigation is necessary, you want effective representation across the board – from lease and contract disputes to avoidance actions like preferences and fraudulent transfers.

Ungaretti & Harris gives you the bankruptcy help you need. Our interdisciplinary team of bankruptcy, litigation and transactional lawyers can create and implement a practical recovery strategy for secured lenders, lessors and other creditors. The same team of lawyers can develop and implement a strategy for acquiring assets through a bankruptcy sale or plan. We understand the perspective of other key players, including the debtor, the committee and the trustee and can help you to understand all the competing interests in a bankruptcy reorganization or liquidation case and thereby avoid unproductive and unnecessary expenditures of time and resources.

Diverse Practice
The diversity of our bankruptcy practice means we have the skill and experience to handle virtually any client need. Because bankruptcies and insolvencies reflect general economic conditions and trends, our areas of emphasis have changed along with client needs: from savings and loan and agricultural insolvencies in the 1980s, to commercial real estate workouts in the 1990s, to today’s massive corporate bankruptcies in the airline and retailing industries.

The recent wave of massive corporate bankruptcies typify this diversity: creditors such as a major food products supplier, private equity firms, a national hotel chain, a municipal government and the largest health insurer in Illinois all engaged Ungaretti & Harris to represent their interests.

Creditors’ Rights
Secured lenders (including commercial banks, finance companies and private investors), lessors creditors’ committees, insurers, management companies and trade creditors rely on us to develop practical recovery strategies in bankruptcy and reorganization. Your lending institution can use our extensive knowledge of finance documentation and credit policies to advance your interests at every stage of a bankruptcy to ensure the fullest recovery of your assets.

Litigation
Litigation can be a necessary part of the bankruptcy process, and we can represent you in all points of contention that come before the bankruptcy courts:

Fraudulent conveyances and preferences.
Setoffs and other motions for relief from the Automatic Stay.
Valuation disputes.
Claim objections.
Executory contract and unexpired lease issues.
Violations of the Automatic Stay and Plan Injunctions.

Recent litigation successes illustrate an impressive range of clients and issues that involve the bankruptcy process itself, as well as asset recovery, defense of avoidance actions and trade creditor protection.

Client: The receiver for a company accused of nationwide credit card fraud. Issue: Liquidation of the company’s assets. Result: Recovery of enough assets to make a substantial distribution to the defrauded creditors and pay the consumer creditor claims nearly in full.
Client: A New York-based commercial mortgage lender. Issue: Default on over $17 million in distressed debt secured by 17 Chicago area fast food franchises. Result: Aggressive representation that resulted in foreclosure at the summary judgment stage, over the vigorous objections of the debtor and its guarantor parent.
Client: A Fortune 500 steel processing company. Issue: Preference lawsuit over prepetition dealings with a major steel company in Chapter 11 proceedings. Result: Dismissal of the lawsuit based on a creative application of the “subsequent advance of new value” defense and application of the client’s prepetition offset rights.

Real Estate
Real estate lenders and developers both rely on us for help with the workouts of problem properties and mortgage investments, including restructurings, foreclosures and bankruptcies. Our lawyers can work with you to:

Resolve defaults on loans for office, hotel and retail properties around the country.
Restructure deals or take title by deed-in-lieu transactions or by foreclosure.
Handle the redevelopment of foreclosed properties (Example: helping a major lender restructure a $78 million shopping mall loan in California to incorporate additional property and funding).
Complete reorganization even when contested by lenders (Example: conducting a multi-day trial to confirm a “cramdown” Chapter 11 plan of reorganization for a commercial real estate company by using a novel interpretation of the Supreme Court’s ruling in the 203 N. LaSalle case).

Asset Acquisition
An insolvent company or a bankruptcy case can provide a unique opportunity for a strategic business acquisition by your firm. Our lawyers can help you identify opportunities and create and implement an acquisition strategy including negotiations, bidding contests, auction sales and closing the deal.

Workouts & Restructurings
In addition to real estate, lenders can use us to undertake reorganization of companies in such diverse industries as distribution, computers, automotive manufacturing and hospitality. Services include the negotiation of debtor-in-possession financing with lenders and the restructuring of existing bank debt. You can rely on us in every step of a reorganization effort, including structuring the terms of financing (in and out of court), addressing operational and administrative issues, negotiating with creditors and forming a plan of reorganization.

Business Results
Whether you’re a creditor, investor or debtor, bankruptcy is ultimately about doing business under difficult circumstances. The Bankruptcy Code allows for a wide range of business options, and we pursue the ones that best meet your needs. You can rely on us to develop effective and creative strategies that get the best business result and protect your investment in any bankruptcy or reorganization.