Tag Archives: business restructuring

Business Restructuring Alert: Don’t make the $1.5 billion mistake

In what is many times considered a ministerial task, the careful preparation and review of UCC-3 termination statements in transactions between debtors and lenders should not be taken lightly.  Secured creditors and their professionals would be wise to make sure that the identification of security interests to be terminated in any filing is completely accurate, and does not include security interests not intended to be released. Neglecting to carefully review UCC-3 termination statements could have a disastrous affect, as illustrated by the recent decision of the Delaware Supreme Court, which effectively converted a $1.5 billion dollar secured loan to an unsecured loan.

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Business Restructuring and Bankruptcy Alert: Amendment to Michigan Statute will significantly impact businesses

The State of Michigan recently enacted Public Act 3 of 2014, amending MCL 205.27a (among other statutes) relating to Responsible Person Liability for Michigan taxes. These amendments, as summarized below, will have a substantial impact on businesses and business owners in the years to come.

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Business Restructuring Alert: New court rule significantly changes receiver appointment, duties and compensation

With little fanfare, the Michigan Supreme Court recently issued an order that significantly changes the rules related to the appointment of receivers. The Order (ADM File No. 2012-30) amends Michigan Court Rules 2.621 and 2.622 as follows:

  • Establishes rules for the appointment of receivers and the orders appointing them
  • Sets forth criteria that prospective receivers must meet
  • Clarifies the duties of receivers
  • Sets forth procedures for the payment of the fees of receivers and their professionals

The new Court Rules, effective May 1, 2014, were adopted after the portions of the originally proposed revisions regarding the selection of receivers were poorly received by judges and judicial groups around the state. While the new provisions raise questions that will generate new case law and cannot be fully addressed here, certain key points are summarized below. 

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Business Restructuring and Bankruptcy Alert- Pay attention to language in loan documents

Parties to commercial loans should take note of the Eighth Appellate District’s recent ruling. In U.S. Bank, N.A. v. Gotham King Fee Owner, L.L.C, 2013-Ohio-1983 (8th App. Dist. May 16, 2013), the Eighth Appellate District (Cuyahoga County) confirmed that courts may appoint a receiver, with expanded powers, on an expedited basis. The terms of the parties’ loan documents proved to be very important in its reasoning. As an initial matter, the decision demonstrates that appointment of a receiver can be a useful remedy for a lender that wants to sell collateral following a borrower’s default. It also serves to remind us that the specific language of loan documents is critically important. This ruling highlights the importance of contract terms and demonstrates that courts will enforce such terms, particularly with respect to commercial loans.

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Business Restructuring and Bankruptcy Alert: Restructuring Options for Continuing Care Retirement Communities

The financial crisis of the late 2000’s, the resulting recession and the tepid recovery have created a challenging environment for continuing care retirement communities (“CCRCs”). While a low interest rate environment during the past few years has made debt service easier, the primary factor in the recession—the decline in housing prices—has created a significant challenge for many CCRCs. Unable to meet occupancy targets and the related credit agreement covenants, many CCRCs are forced to restructure their balance sheets and operations, downsize, or both. A recent prepackaged bankruptcy by a CCRC illustrates one non-traditional, but highly effective, restructuring option.

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Business Restructuring Alert: Who is legally required to pay a receiver’s fees and expenses when the receivership estate does not have sufficient fund

In most state court receivership cases, the order appointing the receiver includes the procedures for the compensation of the receiver and reimbursement of his or her expenses, including the fees and expenses of professionals retained by the receiver. A recent case decided by the Eighth District Court of Appeals of Ohio on November 8, 2012, Dyczkiewycz v. Tremont Ridge Phase 1 Ltd., 2012-Ohio 5173, highlights certain uncertainties in Ohio’s receivership laws in situations where (i) the order appointing receiver does not specifically obligate one or more creditor parties to pay the allowed fees and expenses of a receiver, and (ii) the receivership estate does not have sufficient funds to pay the receiver’s fees and expenses in full after payment of secured obligations. 

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Business Restructuring and Bankruptcy Alert: Proposed amendments to Ohio’s receivership statutes are introduced to the 130th General Assembly

The Ohio General Assembly is considering significant changes to Ohio’s receivership laws, that would, among other things, authorize a receiver’s sale of real estate free and clear of liens without a foreclosure proceeding. The proposed changes, introduced in the now-expired term of the 129th General Assembly and reintroduced in the 130th General Assembly, represent the most significant changes in decades.

Ohio Senate Bill 388, introduced to the 129th General Assembly on November 13, 2012, proposed amendments to Sections 2333.22, 2715.21, 2735.02, and 2735.04 of the Ohio Revised Code to add to and clarify the powers of a court-appointed receiver and provide new procedures for the sale of real property by a receiver free and clear of existing liens, claims and interests. Senate Bill 388 did not make it out of the judiciary committee prior to the expiration of the 129th General Assembly’s term.

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Business Restructuring and Bankruptcy Alert: Recent legislative amendments impact Ohio’s property exemption statute, Fraudulent Transfers…

On December 20, 2012, Governor Kasich signed into law Am. Sub. H.B. 479 (Act), which becomes effective on March 27, 2013. The Act, among other things, makes certain changes to Ohio’s exempt property statute, modifies the Ohio Uniform Fraudulent Transfers Act, clarifies the secured transactions recording law, and prohibits a post-closing solvency covenant from being used as a nonrecourse carveout in nonrecourse loans.

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Business Restructuring and Bankruptcy Alert: What you need to know about recent revisions to Article 9 of the Uniform Commercial Code

On July 1, 2013, a series of revisions to Article 9 (Secured Transactions) of the Uniform Commercial Code (UCC) will take effect throughout the country. The last time Article 9 of the UCC was amended was in 2001. Although these revisions are not as drastic as the revisions which went into effect more than a decade ago, it is critical to pay attention to even the smallest details. Failure to do so could cost a secured lender its perfection and priority over other creditors, or even its rights to the collateral itself. While there are many changes in the 2013 revisions, ranging from drastically important to grammatical, the following changes are the three most important for a secured lender to know.

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Business Restructuring and Bankruptcy Alert: Recent legislative amendments impact Ohio’s property exemption statute, Fraudulent Transfers…

On December 20, 2012, Governor Kasich signed into law Am. Sub. H.B. 479 (Act), which becomes effective on March 27, 2013. The Act, among other things, makes certain changes to Ohio’s exempt property statute, modifies the Ohio Uniform Fraudulent Transfers Act, clarifies the secured transactions recording law, and prohibits a post-closing solvency covenant from being used as a nonrecourse carveout in nonrecourse loans.

Revisions to Ohio Revised Code section 2329.66

Section 2329.66 of the Ohio Revised Code lists types of property that persons domiciled in Ohio may hold exempt from execution, garnishment, attachment, or sale to satisfy a judgment or order.1 Most of the property exemptions are created within section 2329.66, but a few of the exemptions are created in other revised code sections or in federal statutes and incorporated by cross-reference in section 2329.66. Under section 2329.662 of the Ohio Revised Code, the property exemptions are applicable in bankruptcy proceedings to persons domiciled in Ohio who are debtors. The following chart illustrates revisions to section 2329.66(A) impacting property used as a residence: 

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