Bankruptcy and Creditors’ Remedies Issues during COVID-19

During this time, the Bankruptcy & Creditors’ Remedies Group reminds you that we are here and ready to assist as needed. With the uncertainty surrounding COVID-19 and its lasting impact on the economy, you can count on these GDHM attorneys to provide assistance on a variety of the following issues:

  • Debt Restructurings (both from debtor and creditor side), including non-bankruptcy debt restructurings in light of threatened bankruptcy.  This also includes debt restructurings that are debt modifications. There is huge potential federal income tax liability for a lender/borrower/purchaser in connection with a debt modification (or “debt exchange”).
  • Responding to bankruptcies (particularly sorting through issues relating to implications of the automatic stay and dealing with bankruptcy trustees).
  • Purchase/Sale of Business and Business Interests – The COVID-19 economy is expected to produce an increase in M&A and other transactions which will result in ownership changes among mid-sized businesses and real estate ventures.
  • LLC and LP Ownership Changes – The new partnership audit rules which became effective for most LPs LLCs, and general partnerships in 2018 could mark an increase in IRS audits of entities classified as partnerships and will change how liabilities  are shared among partners and members.
  • Business Divorces – Changes in our economy brought about by COVID-19 will likely generate changes and terminations of owner relationships in existing LLCs, LPs and closely-held corporations.
  • Landlord / Tenant issues, including handling of pre-petition rent claims, lease assumption and rejection, termination and eviction issues, and post-petition rent claims.
  • Single Asset Real Estate (“SARE”) cases, including time frames for lifting the stay to foreclose on real estate when the debtor files in bad faith, has no equity in the property, or does not file a reorganization plan that has a reasonable possibility of being confirmed.
  • Oil and Gas cases, including with respect to motions for payment (as “critical vendors”) of pre-petition royalty interest payments and the sale of lease interests.
  • Domestic Asset Protection using Business Entities including conversions of corporations to LLCs and LPs in order to achieve “charging order” protections for entities that wish to remain C-Corporations or S-Corporations for federal tax purposes.
  • Business Litigation issues, assisting in the determination of taxability of settlements and damage awards.
  • Insurance Proceeds issues, including motions to lift the stay in bankruptcy to pursue liquidation of construction defect claims against bankrupt builders.
  • Federal Tax Litigation issues.
  • Domestication of foreign judgments.
  • Post-judgment collections options.

For more information regarding Bankruptcy & Creditors’ Remedies and Tax related issues, you can contact Brian Cumings, Frank Leffingwell and Chris Trickey.