INSOLVENCY & RESTRUCTURING

Once a company files for bankruptcy or is placed into receivership, an automatic "stay of proceedings" is typically imposed. This stay legally prevents you from starting or continuing a lawsuit against the company to collect your debt. Instead of suing, you must follow a specific process to register your claim with the appointed trustee or receiver. Your rights and potential recovery will then be determined within the rules of the insolvency proceeding.

The two processes serve different purposes. A bankruptcy is typically a terminal process for the company, where a trustee is appointed to liquidate all assets and distribute the proceeds to creditors. A receivership, on the other hand, is a remedy for secured creditors. A receiver is appointed (either privately or by the court) to take control of the debtor's assets to sell them and repay the secured lender. While a receivership can lead to the end of the business, its primary goal is asset realization for a specific creditor, not a general liquidation for all creditors.

Purchasing assets from a company in receivership is a unique process. The receiver's primary duty is to maximize recovery for the creditors, so assets are typically sold through a court-supervised sales process. This may involve a formal solicitation of bids to ensure fairness and transparency. Sales are almost always on an "as is, where is" basis, with limited representations or warranties. A court order is then obtained to approve the sale, which can provide the buyer with clear title to the assets, free of prior claims.

We frequently act as a focused resource for other lawyers and their clients. When a commercial transaction, a piece of litigation, or a corporate matter is impacted by insolvency, we provide targeted advice and strategic guidance on the specific insolvency issues. This can involve acting as co-counsel to handle discrete tasks like motions to lift a stay of proceedings, advising on the priority of claims, or providing a strategic overview of how the insolvency will impact the client's primary legal matter.

Yes. These are often referred to as "out-of-court workouts" or informal restructurings. They are private, negotiated solutions between a company and its key stakeholders, without court oversight. This can involve refinancing debt, negotiating new payment terms with major creditors, or finding new sources of capital. An informal workout can be faster, more confidential, and less expensive than a formal court proceeding, but its success depends on achieving consensus with key creditors.