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What You Need to Know about Preferences: Practical Considerations for Lessors
One of the most difficult conversations a bankruptcy lawyer can have with a client is explaining why it has been sued for the recovery of money received pre-petition from a debtor for services rendered or goods supplied. We often hear the same incredulous mantras: “But the [debtor] owed me the money … for a long time.” “We helped stave off bankruptcy because we extended the payment terms.” Often these comments are made to the trustee or debtor who commenced the preference suit, before the creditor consults its attorney. The client believes the suit is a big misunderstanding because the payments it received were on account of a real debt and does not understand the admissions contained in its statements.
The pain of a preference action is much easier to accept in those situations where a creditor knowingly accepted a preferential transfer, but did so in the hope that a bankruptcy would not be filed or the preference suit would never be commenced. This occurs when a lawyer was consulted before the collection efforts were made, and the creditor was advised that the collection process might actually result in the recovery of funds that may have to be repaid if the obligor files for bankruptcy 90 days hence. We have seen a glint in the eye of many a client when deciding whether to accept a payment, or additional collateral from a financially strapped customer when we use the old adage: “Real men take preferences, wimps file proofs of claim.” Of course, the advice to knowingly accept a preferential transfer should only be given after consideration of the cost of obtaining the potentially preferential transfer. If legal action has to be taken to obtain a judgment or the leverage necessary to get payment, the cost may not be justified if a bankruptcy filing is inevitable. Often the creditor has very little information that will allow it to predict with any amount of accuracy the likelihood of a customer filing a bankruptcy petition in the succeeding 90 days.
Why So Many Great Lawyers Stink at Business Development and What Law Firms Are Doing About It
Why is it that those who are best skilled at advocating for others are ill-equipped at advocating for their own skills and what to do about it?
Bankruptcy Sales: Finding a Diamond In the Rough
There is no efficient market for the sale of bankruptcy assets. Inefficient markets yield a transactional drag, potentially dampening the ability of debtors and trustees to maximize value for creditors. This article identifies ways in which investors may more easily discover bankruptcy asset sales.
The DOJ's Corporate Enforcement Policy: One Year Later
The DOJ's Criminal Division issued three declinations since the issuance of the revised CEP a year ago. Review of these cases gives insight into DOJ's implementation of the new policy in practice.
A Lawyer's System for Active Reading
Active reading comprises many daily tasks lawyers engage in, including highlighting, annotating, note taking, comparing and searching texts. It demands more than flipping or turning pages.
Protecting Innovation in the Cyber World from Patent Trolls
With trillions of dollars to keep watch over, the last thing we need is the distraction of costly litigation brought on by patent assertion entities (PAEs or "patent trolls"), companies that don't make any products but instead seek royalties by asserting their patents against those who do make products.