Bankruptcy & Restructuring

Weekly Bankruptcy Alert March 10, 2025 (For the Week Ending March 9, 2025)

Chapter 11

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

Mass Power Solutions LLC(Marlborough, MA)
Building Equipment Contractors
Worcester(MA)
$0to$50,000
$1,000,001to$10 Million
3/5/25

Lake Spofford Cabins, Inc.(Spofford, NH)
RV Parks and Recreational Camps
Concord(MA)
$1,000,001to$10 Million
$100,001to$500,000
3/3/25

New Leda Lanes, Inc,(Nashua, NH)
Not Disclosed
Concord(MA)
$100,001to$500,000
$1,000,001to$10 Million
3/3/25

Levy Ventures LLC(New City, NY)
Activities Related to Real Estate
White Plains(NY)
$10,000,001to$50 Million
$10,000,001to$50 Million
3/5/25

JC TopCo, Inc.2(Kansas City, MO)
Management of Companies and Enterprises
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
3/8/25

Imerys Talc Italy S.P.A.(Turin, Italy)
Nonmetallic Mineral Mining and Quarrying
Wilmington(DE)
$10,000,001to$50 Million
$1,000,001to$10 Million
3/9/25

YJ Simco LLC(New York, NY)
Not Disclosed
Manhattan(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
3/9/25

Chapter 7

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

Guzman Trading, Inc(Randolph, MA)
Not Disclosed
Boston(MA)
$0to$50,000
$100,001to$500,000
3/4/25

Allied Resin Technologies, LLC(Leominster, MA)
Not Disclosed
Worcester(MA)
$100,001to$500,000
$1,000,001to$10 Million
3/6/25

1Business Type information is taken from Bankruptcy Court filings, which may include incorrect categorization by the debtor or others.
2Additional affiliate filings include: JC Parent Corporation, JC Intermediate Holdings, Inc., Jack Cooper Investments, Inc., Jack Cooper Equipment Leasing, LLC, Jack Cooper Holdings, LLC, Jack Cooper Rail & Intermodal, LLC, Jack Cooper Diversified II, LLC, Jack Cooper Transport Company, LLC, Auto Handling, LLC, North American Auto Transportation, LLC, Jack Cooper Retail and Shuttle, LLC, Auto & Boat Relocation Services Company, LLC, Jack Cooper CT Services, LLC and Jack Cooper Logistics II, LLC.

Connecticut Establishes Emergency Certificate of Need Process for Hospitals in Bankruptcy

On March 3, 2025, Connecticut Governor Ned Lamont signed a law establishing a new process for hospitals in bankruptcy to apply for an “emergency certificate of need” (CON) to approve a transfer of ownership. The law, titled “An Act Concerning An Emergency Certificate Of Need Application Process For Transfers Of Ownership Of Hospitals That Have Filed For Bankruptcy Protection, The Assessment Of Motor Vehicles For Property Taxation, A Property Tax Exemption For Veterans Who Are Permanently And Totally Disabled And Funding Of The Special Education Excess Cost Grant” (the “Act”), was passed by the Connecticut Legislature though its emergency certification process in order to expedite its approval, presumably to allow the law and new process to be available for CON review of the potential sale(s) of Prospect Medical hospitals in Connecticut expected this year.
Emergency CON Process
Under the Act, the emergency CON process is to be available when “(1) the hospital subject to the transfer of ownership has filed for bankruptcy protection in any court of competent jurisdiction, and (2) a potential purchaser for such hospital has been or is required to be approved by a bankruptcy court.”
The Act requires the Office of Health Strategy (OHS) to:

Develop an emergency CON application for parties to utilize, and in doing so OHS must “identify any data necessary to analyze the effects of a hospital’s transfer of ownership on health care costs, quality and access in the affected market.”

Notably, if the buyer is a for-profit entity, OHS is permitted to require additional information to ensure that the continuing operation of the hospital is in the public interest.

Make a “completeness” determination on a submitted application within 3 business days.

Once an emergency CON application is deemed complete, OHS may – but is not required to – hold a public hearing within 30 days thereafter, and if a hearing is held OHS must notify the applicant(s) at least 5 days in advance of the hearing date. The Act provides that a public hearing or other proceeding related to review of an emergency CON is not a “contested case” under the state’s Uniform Administrative Procedure Act, which limits the procedural and appeal rights of the applicant(s). The Act also allows OHS to contract with third-party consultants to analyze the effects of the transfer on cost, access, and quality in the community, with the cost borne by the applicant(s) and not to exceed $200,000.
Emergency CON Decisions and Conditions
The Act requires final decisions on emergency CONs to be issued within 60 days of the application being deemed complete. Importantly, OHS is required to “consider the effect of the hospital’s bankruptcy on the patients and communities served by the hospital and the applicant’s plans to restore financial viability” when issuing the final decision. The Act also permits OHS to “impose any condition on an approval of an emergency” CON, as long as OHS includes its rationale (legal and factual) for imposing the condition and the specific CON criterion that the condition relates to, and that such condition is reasonably tailored in time and scope. The Act also expressly provides that any condition imposed by OHS on the approval of an emergency CON will apply to the applicant(s), including any hospital subject to the transfer of ownership “and any subsidiary or group practice that would otherwise require” a CON under state law that is part of the bankruptcy sale. However, the Act does allow the applicant(s) to request a modification of conditions for good cause, including due to changed circumstances or hardship.
Finally, the Act provides that the final decision on an emergency CON, including any conditions imposed by OHS as part of the decision, is not subject to appeal.
Takeaways
The Act seeks to establish a clear expedited pathway for CON review of hospital (and health system) sales as part of the bankruptcy process. The specific process, including the form of application, is likely to be rolled out quickly by OHS to be available as part of the resolution of the Prospect Medical bankruptcy process anticipated to occur during 2025. The ultimate efficacy of the process will depend upon the specific data sought as part of the emergency CON process, and on the scope of any conditions imposed by OHS on the sales (which could introduce uncertainty into the bankruptcy sale and approval process), but the establishment of this avenue for review is likely to be welcomed by parties to hospital system bankruptcy actions.

Weekly Bankruptcy Alert March 3, 2025 (For the Week Ending March 2, 2025)

Chapter 11

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

1 Dalfanso LLC(Newburgh, NY)
Not Disclosed
Poughkeepsie(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/24/25

Dynamic Aerostructures LLC(Valencia, CA)
Aerospace Product and Parts Manufacturing
Wilmington(DE)
$10,000,001to$50 Million
$50,000,001to$100 Million
2/25/25

Dynamic Aerostructures Intermediate LLC(Valencia, CA)
Aerospace Product and Parts Manufacturing
Wilmington(DE)
$10,000,001to$50 Million
$50,000,001to$100 Million
2/25/25

Forrest Machining LLC(Valencia, CA)
Aerospace Product and Parts Manufacturing
Wilmington(DE)
$10,000,001to$50 Million
$50,000,001to$100 Million
2/25/25

Eureka Realty Corp.(New York, NY)
Residential Building Construction
Manhattan(NY)
$1,000,001to$10 Million
$1,000,000to$10 Million
2/25/25

Quinebaug Camp Properties, Inc.(Woonsocket, RI)
Not Disclosed
Providence(RI)
$100,001to$500,000
$500,001to$1 Million
2/28/25

MOM CA Investco LLC(Newport Beach, CA)
Activities Related to Real Estate
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
2/28/25

MOM AS Investco LLC(Newport Beach, CA)
Activities Related to Real Estate
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
2/28/25

MOM BS Investco LLC(Newport Beach, CA
Activities Related to Real Estate
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
2/28/25

Azzur Group Holdings LLC2(Hatboro, PA)
Management, Scientific, and Technical Consulting Services
Wilmington(DE)
$100,000,001to$500 Million
$100,000,001to$500 Million
3/2/25

Eureka Realty Corp.(New York, NY)
Residential Building Construction
Manhattan(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/25/25

Chapter 7

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

Genera Health Direct LLC(Needham, MA)
Not Disclosed
Boston(MA)
$0to$50,000
$500,000to$1 Million
2/24/25

AM Project 145 NWS LLC(Boston, MA)
Activities Related to Real Estate
Boston(MA)
$10,000,001to$50 Million
$1,000,001to$10 Million
2/25/25

AM Project 169 NWS LLC(Boston, MA)
Activities Related to Real Estate
Boston(MA)
$10,000,001to$50 Million
$1,000,001to$10 Million
2/25/25

MSI Global Talent Solutions LLC(Hampton, NH)
Not Disclosed
Concord(NH)
$100,000to$500,000
$1,000,001to$10 Million
2/25/25

At Home, Inc.(Dover-Foxcroft, ME)
Retail Trade
Bangor(ME)
$100,001to$500,000
$1,000,001to$10 Million
2/28/25

1Business Type information is taken from Bankruptcy Court filings, which may include incorrect categorization by the debtor or others.
2Additional affiliate filings include: Azzur Group, LLC, Cobalt LLC, Azzur Consulting LLC, Azzur Austin LLC, Azzur Chicago LLC, Azzur Denver LLC, Azzur IT LLC, Azzur North Carolina, LLC, Azzur of CA, LLC, Azzur of NE, LLC Azzur Princeton LLC, Azzur San Diego LLC, Azzur San Francisco LLC, Azzur Solutions LLC, Azzur Technical Services – Boston LLC, Azzur Training Center – Raleigh LLC, Azzur Washington DC LLC, Azzur Worcester LLC, Azzur Cleanrooms-On-Demand – Services LL, Azzur Cleanrooms-On-Demand – Boston LLC, Azzur Cleanrooms-On-Demand -Burlington LLC, Azzur Cleanrooms-On-Demand – Devens LLC, Azzur Cleanrooms-On-Demand – Raleigh LLC, Azzur Cleanrooms-On-Demand San Diego LLC, Azzur Cleanrooms-On-Demand San Francisco LLC, Azzur Labs, LLC, Azzur Labs – Boston LLC, Azzur Labs – Chicago LLC, Azzur Labs – Dallas LLC, Azzur Labs – San Diego LLC, Azzur Labs – San Francisco LLC and Azzur Labs NC, LLC.

(UK) Is 5p Enough to Cram Down HMRC in a Restructuring Plan?

For those in the mid-market who have watched developments in restructuring plans (RP) move from a potential rescue tool, to something prohibitively expensive, the OutsideClinic RP might be one to watch. Not least because the RP seeks to cram down HMRC.
Following RPs proposed by Naysmyth and the Great Annual Savings Company (which were unsuccessful in cramming down HMRC) the appetite to use an RP in the mid-market does seem to have quietened down, despite HMRC subsequently issuing guidance for insolvency practitioners intended to help companies that wish to restructure using an RP.
There is little reported about the OutsideClinic’s RP at the moment, save that as part of the plan it seeks to treat unsecured creditors and HMRC as secondary preferential creditor, in the same way, by paying both classes of creditor 5p in the £.
HMRC’s objections to previous plans have largely stemmed from the fact that the RPs have not recognised its preferential status in how the restructuring surplus (created by the RP) has been shared.
The relevant alternative to OutsideClinic’s RP is stated to be administration, and, somewhat unusually, the estimate suggests that HMRC would receive nothing in an administration. That might differentiate this RP from other “typical” mid-market plans. However, if press reports are correct, HMRC has indicated that it intends to challenge the plan including how it is treated under the plan given its preferential status.
If HMRC do challenge the RP, the development of HMRC’s argument about its treatment as preferential creditor under the plan will be one to watch, because this will likely inform how mid-market RPs could develop in the future.
That said, if HMRC’s position is that it will challenge all RPs to reflect its position as an involuntary creditor, the costs of having to deal with that challenge on every RP are likely to price out RPs for the majority of the mid-market. Perhaps the real one to watch, will be an RP that receives HMRC support even where it includes some write down of amounts owed to HMRC!

Troubled Assets: Key Considerations

In the current cycle, asset quality remains strong at most institutions. There are occasional exceptions — a poorly managed business, a hurricane or other unexpected event, etc. — but for the most part, banks and other lenders have strong portfolios.
This, of course, will not last forever. Interest rates have risen in the last few years. Certain sectors, including office and retail, have faced headwinds as technology has fueled a rise in remote work and remote shopping.
It is prudent to plan for the next downturn. The following are some key considerations in dealing with troubled assets.
1. AN ENFORCEABLE WORKOUT IS A GOOD SOLUTION
As in most areas of the law, a settlement is better than litigation. If it is possible to structure a forbearance agreement to allow the borrower to come back into compliance with the loan obligations, that often is the best solution.
It is best to build in some protections for the lender, if possible under the circumstances. A forbearance agreement without some “teeth” often results in simply kicking the can down the road — delaying the default rather than remedying the situation.
If possible, the borrower should concede, in the forbearance agreement, the necessary elements the lender otherwise would have to prove in a court case to enforce its loan documents. In exchange for the lender’s forbearance, the borrower should concede that the loan is in default, the specific payments missed or other violations, the amount due, and that the borrower has no defense to payment. The borrower should concede that if it fails to abide by the terms of the forbearance agreement, the lender is entitled to a judgment against it in court in a specified amount. The borrower should concede that if it files for bankruptcy protection, it will, within the bounds of applicable bankruptcy law, cooperate with the lender’s efforts to lift any bankruptcy stay to pursue collateral.
2. DO YOU WANT THE COLLATERAL?
Another key consideration is the quality of the collateral. Real estate or other collateral for which there is a ready market at a good price of course is best, but not all loans have such collateral. Some real estate and other collateral can be difficult to manage and dispose.
The lender is not required to pursue the collateral, absent unusual provisions rarely contained in standard loan documents. A serious consideration whether to pursue the collateral, and what the lender intends to do with it if it forecloses, should be made at the outset.
Many loan documents provide for the appointment of a receiver as one of the lender’s remedies. A receiver is an officer appointed by a court to manage property until the lender is able to foreclose on it or the borrower is able to settle. For certain properties — office, retail, and multifamily in particular — a receiver can be a good option in some circumstances. The receiver takes control of the property, books, and records; pays the bills and operates the property; and in some circumstances is able to market it and bring potential buyers to the court for approval. A receiver can be a good option when a lender needs to have collateral managed and marketed appropriately without having to take title itself. The lender should bear in mind that while the receiver has control of the property, the lender will likely incur expenses. The receiver’s fee will have to be paid, as will the property’s operating expenses. To the extent that the property does not generate sufficient income to do this, the shortfall often must be covered by the lender until the property is sold. While any such advances usually can be added to the loan balance, they may not ultimately be recoverable.
3. IF YOU GET A MONETARY JUDGMENT, WHAT THEN?
The usual remedy to recover on a defaulted loan, of course, is to sue the borrower for the amount owed. Most such cases are straightforward. Assuming the lender can prove that it owns the loan, that the loan is in default, and what amount is due, the cases usually result in a judgment for the lender. While, in some circumstances, there can be lender liability issues to consider, most often the resolution is in the lender’s favor.
This, however, is only the beginning. A judgment is simply a piece of paper stating that the borrower owes a certain sum to the lender. It does not guarantee collection.
A survey of the borrower’s assets, beyond any pledged collateral, is an important first step. Does the borrower own real estate in its own name? A lender’s monetary judgment can become a lien on that property. Are there other liens that would be senior in time to the lender’s judgment? Is there enough remaining equity to make a levy upon the real estate worth it? The same analysis would apply with respect to personal property.
OTHER CONSIDERATIONS
Be ready for bankruptcy. Good bankruptcy counsel can guide a lender to the best resolution if a debtor files a bankruptcy petition.
Remember that there can be a market for your loan documents and for your monetary judgments. Private equity funds exist that will purchase your paper. An important protection to build into any sale of your paper is that the purchaser indemnifies and holds the lender harmless from any lender liability claims.

Update of German Law Aspects of Crypto Assets

Our recently updated article considers how EU and German civil and regulatory law approach crypto assets with a particular focus on how those types of crypto assets are dealt with in an insolvency.
In this article we explore the different types of crypto assets there are, the legal nature of them, how crypto assets are dealt with in insolvency proceedings and the recovery of such assets.

(UK) Office-Holder Remuneration Applications – The Importance of Details

When it comes to applications by office-holders for approval of their remuneration, the message in the case of Poxon and another v Wejo Ltd (in administration) [2025] EWHC 135 (Ch) was, the detail matters.
Background
Having failed to obtain approval from the creditors in respect of both their pre and post administration costs, the joint administrators of Wejo invited the court to fix the basis of their post-administration remuneration and expenses by reference to time properly spent by them and their staff in attending to the administration of the company pursuant to r. 18.23 of the IR 2016 and approve their unpaid pre-administration costs as an expense of the administration pursuant to r. 3.52(5) of the IR 2016 (the Application).
Certain creditors of Wejo intervened to oppose the Application on the grounds that the joint administrators’ evidence in support was insufficient to enable to court to properly consider the Application.
However, the joint administrators sought to argue that r. 18.23 was concerned with fixing the “basis” of remuneration only, and the court need not be concerned to scrutinise the fees estimate delivered to creditors pursuant to r. 18.16(4)(a) (the Fees Estimate) – if the creditors had concerns regarding the amount of remuneration sought, their remedy was under r. 18.34.
Accordingly, the issues raised by the case where:

the extent to which, if at all, the court should scrutinise the quantum of the Fees Estimate, when it is asked to determine the basis of remuneration on an application brought pursuant to r. 18.23; and
the level of detail required more generally on applications bought pursuant to r. 3.52 and r. 18.26.

Outcome
Unfortunately for the joint administrators of Wejo, the judge was not prepared to fix the basis for remuneration (or to approve pre-administration fees) because the information provided by the administrators about the work done did not enable him to form a sensible view on the reasonableness of the fees, especially as the Fees Estimate now represented work already carried out.
One might be forgiven for thinking that when seeking to fix the basis of remuneration, there is a distinction between that, and the level of remuneration, given the wording in r.18.23 provides for the court to “fix the basis”, not the amount. But the two are linked.
The insolvency practice direction, which the judge turned to in this case, sets out guiding principles for remuneration applications – the objective being to ensure the amount and/or basis of the remuneration to be fixed by the court is fair.
The basis upon which the fees were to be drawn could not therefore be determined without scrutiny of the Fee Estimate. The judge wanted to see more information to support the time spent by reference to the work done.
The judge also disagreed with the joint administrators’ submission that a creditor’s ability to challenge the amount of remuneration pursuant to r. 18.34, extended to remuneration fixed by the court under r. 18.23.
As such, the Application was adjourned to allow the administrators to provide further information.
Key take-aways for Office-Holders
It is clear from Wejo that where the court is being asked to fix the basis of remuneration by reference to time properly spent that:

The onus is on the office holder to justify their fees.
The court will need to understand why the work has been undertaken and be satisfied that it is both reasonable and commensurate with the fees incurred.
In doing this the court will scrutinise the remuneration that an office-holder is seeking to recover by reference to their fees estimate and will require an office holder to follow the guiding principles in the practice direction. In particular the requirements of paragraph 21 of the Practice Direction: Insolvency Proceedings [2020] BCC 698.

The costs of preparing such an application can often be quite steep, due to the level of information that the court requires, and as this case demonstrates, expects.
Although office holders have 18 months from the date of their appointment, to make an application to fix the basis of their remuneration, there might be something to be said for making an application to court to fix the basis of remuneration early – the more work that has been done, the more information the court will require.

Texas Supreme Court Rejects Repackaging of Professional Claims

Artful Pleading Suffers Smackdown from Texas Supreme Court
On February 21, 2025, in Pitts v Rivas, the Texas Supreme Court finally accepted and applied the “anti-fracturing rule” to professional liability claims. The rule “limits the ability of plaintiffs to recharacterize a professional negligence claim as some other claim – such as fraud or breach of fiduciary duty – in order to obtain a litigation benefit like a longer statute of limitations.”1 This rule shall apply to any professional liability claim. Long recognized by Texas Courts of Appeals – primarily in legal malpractice cases – the Court applied the anti-fracturing rule in an accountant’s malpractice case.
BackgroundIn Pitts, a former client alleged multiple causes of action including fraud, breach of fiduciary duty, and breach of contract, as well as negligence, gross negligence, and professional malpractice against a group of accountants. On summary judgment, the accountant defendants argued the negligence claims were barred by Texas’s two-year limitations statute, and the fraud, contract, and fiduciary duty claims were barred by the anti-fracturing rule. The accountant defendants also claimed the breach of contract action was barred by Texas’s four-year limitations. The trial court granted summary judgment and dismissed the suit. The Court of Appeals disagreed regarding dismissal of the fraud and fiduciary duty claims and allowed them to proceed. The Texas Supreme Court reversed and held that under the undisputed facts, there was no viable claim for breach of fiduciary duty, and the fraud claim was barred by the anti-fracturing rule.
The Texas Supreme Court explained that the anti-fracturing rule limits plaintiffs’ attempts “to artfully recast a professional negligence allegation as something more – such as fraud or breach of fiduciary duty – to avoid a litigation hurdle such as the statute of limitations.”2 The Court cautioned that it is the “gravamen of the facts alleged” that must be examined closely rather than the “labels chosen by the plaintiff.”3
If the essence, “crux or gravamen of the plaintiff’s claim is a complaint about the quality of professional services provided by a defendant, then the claim will be treated as one for professional negligence even if the petition also attempts to repackage the allegations under the banner of additional claims.”4 To survive application of the rule, a plaintiff needs to plead facts that extend beyond the scope of what has traditionally been considered a professional negligence claim.5
In Pitts, the gravamen of the claims was that the accountants made accounting errors that eventually were fatal to the Rivas’s business, resulting in its bankruptcy. Although certain the accountants’ alleged errors occurred outside of the confines of their engagement agreement, the Court noted those errors still fell within the work that an accountant might generally perform for a small business. “The rule extends to any allegation that traditionally sounds in professional negligence[.]”6 The thrust of the claim based upon the facts was that the accountants were allegedly merely negligent in providing competent accounting services, which did not fall within a breach of fiduciary duty or fraud.7
AnalysisIn dissecting the difference between fraud and negligence, the Court noted that “[o]verstating one’s professional competence is a classic example of malpractice.”8 While the accountants realized their mistakes, failed to confess hoping “nothing would come of it,” and “finally suggested ways to hide them,” the Court noted that there was no evidence that the accountants were “engaged in a fraudulent scheme” against the business and its owners or intended in any way to harm them.9 Indeed, the actual harm to the business was due to the accounting errors made by the defendants and not from any misrepresentations associated with those errors.10
With respect to the claim for breach of fiduciary duty, the Court held that whether the anti-fracturing rule was applicable, no fiduciary duty existed as a matter of law.11
___________________________________________________________________________________________________________
1 Pitts v Rivas, 2025 Tex. LEXIS 131 *1 (Tex. 2025).2 Id. at *6-7.3 Id. at *7.4 Id.5 Id. at *8.6 Id. at *12.7 Id. at *13-14.8 Id.at *14.9 Id. at *14-15. 10 Id. at *15.11 Id. at *17.

MIDDLE EAST: New Saudi Netting Regulation Creating a Buzz

There was a buzz during the joint association conference in Riyadh, Saudi Arabia on the 19 February. A collaboration by ISDA, ISLA and ICMA, the industry associations representing parties that enter into transactions such as derivatives, securities lending and repurchase transactions, is indeed unusual.
However, it was the introduction two days prior, on the 17 February, by the Saudi Central Bank (SAMA) of the Close-out Netting and Related Financial Collateral Regulation that caused the excitement. It is effective from that date. The regulation establishes the enforceability of netting agreements and related financial collateral arrangements with SAMA supervised entities, particularly in the event of a failure by one of the parties to such transactions. The primary objective is to ensure that the contractual provisions of netting agreements are enforceable both inside and outside bankruptcy proceedings, reducing credit risk exposure and enhancing financial stability.
The impact of this regulation on cross-border transactions and business in Saudi Arabia is significant. By streamlining the process of settling obligations between defaulting and non-defaulting parties, the regulation reduces the risk and uncertainty associated with financial transactions. Firms can now engage in transactions with greater confidence, knowing that their netting agreements will be upheld even in the event of a default.
The next step is for the associations to publish legal opinions that support the enforceability of close out netting provisions, in their published agreements, on a cross-border basis. These annual opinions are published globally. Parties rely on these opinions to reduce credit risk exposure and, where applicable, reduce their regulatory capital requirements. Publication will provide the ‘green light’ for financial institutions to commence trading of such transactions on a greater scale. This development can certainly be regarded as another step in Saudi’s Vision 2030 to become a global investment powerhouse. Hence the buzz.

Weekly Bankruptcy Alert February 24, 2025 (For the week ending February 23, 2025)

Covering reported business bankruptcy filings in Massachusetts, Maine, New Hampshire, and Rhode Island, and Chapter 11 bankruptcy filings in New York and Delaware listing assets of more than $1 million.
Because your business extends beyond the borders of a single state, ours does too. Today, we are a multi-disciplinary team of highly creative, hard working, responsive, business savvy and experienced bankruptcy and creditors’ rights professionals serving you from offices located in four New England states and the District of Columbia.

Chapter 11

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

Nikola Corporation2(Phoenix, AZ)
Motor Vehicle Manufacturing
Wilmington(DE)
$500,000,001to$1 Billion
$1,000,000,001to$10 Billion
2/19/25

Elfand Organization LLC(New York, NY)
Not Disclosed
Manhattan(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/18/25

DanPowr64 LLC(Salem, MA)
Not Disclosed
Boston(MA)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/19/25

679 Columbia Realty, LLC(Franklin, MA)
Residential Building Construction
Worcester(MA)
$0to$50,000
$0to$50,000
2/19/25

JW Realty Holdings LLC(Monroe, NY)
Activities Related to Real Estate
Poughkeepsie(NY)
$1,000,001to$10 Million
$1,000,001to$10 Million
2/20/25

Chapter 7

Debtor Name
BusinessType1
BankruptcyCourt
Assets
Liabilities
FilingDate

Sky Properties LLC(Providence, RI)
Not Disclosed
Providence(RI)
$100,001to$500,000
$500,001to$1 Million
2/20/24

1Business Type information is taken from Bankruptcy Court filings, which may include incorrect categorization by the debtor or others.
2Additional affiliate filings include Nikola Properties, LLC, Nikola Subsidiary Corporation, Nikola Motor Company LLC, Nikola Energy Company LLC, Nikola Powersports LLC, Nikola H2 2081 W Placentia Lane LLC, 4141 E Broadway Road LLC, Free Form Factory, Inc., and Nikola Desert Logistics LLC.

TMA Chicago/Midwest Podcast Hosted by Paul Musser | Jonathan Weinberg on Private Credit and the Importance of Early Intervention in Workouts [Podcast]

In the latest TMA Chicago/Midwest podcast episode, host and Insolvency and Restructuring Partner Paul Musser sat down with Jonathan Weinberg, Co-Head of the Portfolio Group at Monroe Capital LLC. Together, they discussed Jonathan’s career path in restructuring, comparisons and contrasts between private credit and traditional bank lending horizons, and the importance of early intervention in workouts. Jonathan also noted highlights from his involvement in the Turnaround Management Association (TMA) as well as the benefits of building one’s network and fostering relationships within the restructuring community.
Jonathan explained that his career began in investment banking, where he developed a keen interest in capital structures during the subprime mortgage boom. This experience led to his transition into restructuring and distressed investment banking, where he found fulfillment in using his deep understanding of capital markets to solve complex financial issues. Jonathan said that in his role at Monroe Capital, early intervention and proactive management have been instrumental in leading strategies for stressed credits.
Paul and Jonathan went on to discuss comparisons and contrasts between private credit and traditional bank lending, particularly in terms of flexibility and decision-making. Jonathan explained that private credit lenders such as his firm have more leeway in managing stressed and distressed situations due to fewer regulatory constraints, as compared to traditional banks. This flexibility allows them to engage in creative solutions, including taking equity positions or working closely with sponsors to navigate financial challenges. In any workout, both Jonathan and Paul emphasized the value of maintaining strong borrower relationships in order to foster collaborative problem-solving.
Finally, Jonathan shared takeaways from his experiences as a member of the TMA organization and how it fostered his own professional growth and business development. He underscored the value of building relationships with industry peers across different functions, such as legal, financial advisory and lending. He encourages professionals at the beginning of their restructuring careers to proactively foster their skills and networks, as such connections can be crucial when seeking guidance on complex distressed or financial situations.

The Nuts and Bolts of a Chapter 11 Plan

Editors’ Note: Most business people, finance professionals, and even attorneys have no more than a passing familiarity with bankruptcy. If your company is (or you, personally are) having financial difficulties, then bankruptcy may be an option (although there are other options). A business and its owner/senior executives often have two types of bankruptcy available to them: Chapter 7 and Chapter 11. Chapter 13 is also available to individuals but there are limits that apply that commonly make the option unavailable to business owners.
The word ‘Chapter’ refers to how the US Bankruptcy Code is organized: Chapter 7 is titled “Liquidation” and Chapter 11 is titled “Reorganization.” The title of Chapter 11 is, however, misleading because one (a company or a person) who files Chapter 11 can use it to reorganize or liquidate. In either case, a ‘successful’ Chapter 11 usually — but not always — involves the confirmation of a Chapter 11 plan.
Chapter 11 bankruptcy serves as a vital mechanism for businesses aiming to restructure their debts and continue operations. This article delves into the intricacies of Chapter 11 plans, highlighting the process, key participants, and essential elements for successful reorganization.
What Is a Chapter 11 Plan?
A Chapter 11 plan is essentially a contract — a legally binding document that dictates how a company will distribute its assets and/or equity in itself to satisfy its financial obligations. Once approved by a bankruptcy court, the plan dictates how creditors are repaid and how the company will proceed financially.
Evan Hill, a partner at Skadden, Arps, Slate, Meagher & Flom, describes it as a roadmap that lays out how creditors will be treated and how the company will be structured post-bankruptcy. Once confirmed by the court, the plan becomes binding on all parties involved.
Initially, the debtor (the business filing for bankruptcy) has the exclusive right to propose a plan for the first 120 days after filing. This exclusivity period can be extended or challenged by creditors if they believe the debtor isn’t making sufficient progress.
Key Players in a Chapter 11 Case
There can be many parties involved in a Chapter 11 plan, often with different or competing motivations:

The Debtor: The company (or individual) filing for bankruptcy, aiming to restructure debt and continue operations or to sell its assets for the highest price possible to repay creditors as much as possible.
Secured Creditors: Lenders with collateral, such as banks holding a mortgage.
Unsecured Creditors: Suppliers, vendors, or litigation claimants without collateral. Their interests vary widely depending on their relationship with the debtor.
Equity Holders: Shareholders who are at the bottom of the distribution hierarchy.
The US Trustee: A branch of the US Department of Justice ensuring the process is fair and compliant.
The Bankruptcy Judge: The final authority who confirms or denies the Chapter 11 plan.

David Wood, a partner at Marshack Hays Wood, notes that secured creditors usually just want to get paid, while unsecured creditors may have business interests beyond just repayment.
Creating a Chapter 11 Plan
Some companies enter bankruptcy with a pre-negotiated plan in place, which can expedite the process. Others develop their plans during the bankruptcy case through negotiations with creditors.
Matt Christensen, a partner at Johnson May, explains that the more a debtor can pre-negotiate with major creditors, the smoother the process tends to be. Otherwise, the debtor may face competing plans from creditors who have their own ideas about how the company should be restructured. In smaller cases, debtors often draft a plan after filing, once they have a clearer picture of their financials and creditor positions.
Key Requirements for Plan Confirmation
To be confirmed by the court, a Chapter 11 plan must meet several legal requirements under Section 1129 of the Bankruptcy Code:

Feasibility: The plan must be realistic and demonstrate that the reorganized company can survive.
Good Faith: The plan must be proposed in a fair and honest manner.
Best Interests Test: Creditors must receive at least as much as they would if the company were liquidated under Chapter 7.
Impaired Class Acceptance: At least one class of impaired creditors must vote in favor of the plan.
Cramdown Provisions: If not all creditors agree, the plan can still be confirmed if it meets certain fairness criteria.

Christensen notes that Subchapter V of Chapter 11, which smaller businesses can opt into, have fewer hurdles and allow for debtor-friendly provisions like the elimination of the absolute priority rule.
The Role of the Disclosure Statement
In traditional Chapter 11 cases (but not in Subchapter V cases), the court must approve a disclosure statement before a plan can move to a vote. In some cases, debtors seek conditional approval to streamline the process. A disclosure statement, which accompanies the Chapter 11 plan, provides detailed information for creditors. Creditors and other interested parties need to understand what they’re voting on. A disclosure statement lays out the financial situation, how debts will be treated, and why the plan is viable.
Voting and Confirmation Process
Once the disclosure statement is approved, creditors vote on the plan.

Acceptance: A class of creditors approves if two-thirds in amount and more than half in number vote in favor.
Cramdown: If certain classes object, the court can confirm the plan anyway, provided it is fair and equitable.

Wood emphasizes that this is where negotiation skills come into play. The process of building consensus can go more smoothly with more buy-in upfront.
Reorganization vs. Liquidation Plans
Not all Chapter 11 cases aim to keep a company operating. Sometimes, a debtor files a liquidation plan, which outlines how assets will be sold to maximize creditor recovery. Hill points out that liquidation plans don’t typically grant the debtor a discharge from debts, making them different from reorganization plans.
Understanding Key Legal and Financial Considerations in Chapter 11
1. Debtor-in-Possession (DIP)
In Chapter 11 cases, the debtor often continues to operate the business as a ‘debtor-in-possession’ (DIP). This means that the debtor retains control of assets and business operations during the bankruptcy process, without the appointment of a trustee. The DIP has fiduciary duties to creditors and must operate within the confines of the Bankruptcy Code.
2. Automatic Stay
Upon filing for Chapter 11, an automatic stay is enacted, which halts all collection activities, foreclosures, and lawsuits against the debtor. This provision provides the debtor with temporary relief from creditors, allowing time to propose a reorganization plan.
3. Priority Claims
Certain creditors have priority claims under the Bankruptcy Code, meaning they are entitled to be paid before general unsecured creditors. Priority claims include certain tax obligations, employee wages, and administrative expenses incurred during the bankruptcy process.
4. DIP Financing
Businesses in Chapter 11 may require financing to continue operations during the bankruptcy process. DIP financing allows debtors to secure new loans, often with court approval, giving these lenders priority repayment status.
Final Thoughts
Although the confirmation process commonly takes place long after the filing of the Chapter 11 case, it is typically critical to consider the strategy for confirmation before filing the case.

To learn more about this topic view The Nuts & Bolts of Chapter 11 (Series I) / The Nuts & Bolts of a Chapter 11 Plan. The quoted remarks referenced in this article were made either during this webinar or shortly thereafter during post-webinar interviews with the panelists. Readers may also be interested to read other articles about Chapter 11.
This article was originally published on here.
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