In the past few months, businesses have been thrust into a maelstrom of new historic challenges: a virulent pandemic of uncertain duration, depressed demand for products and services, social unrest and even outright inability to open or conduct business due to policies intended to slow the spread of the virus.  For some firms, emergency government loan assistance has provided only temporary relief.

The impact of this unprecedented crisis has been swift and devastating: a wave of bankruptcies by major retailers (J.C. Penney, Hertz and others) and economic stress to almost every industry and business.  As a result, clients should be careful in dealing with customers facing insolvency issues and should also seek advice on how to successfully navigate these already strained relationships.  Clients facing their own financial issues should also carefully consider all aspects and ramifications of dealing with creditors and  pursuing effective extensions, modifications and/or restructurings. If these relationships and issues are not properly managed, then businesses may suffer unplanned losses and declines in enterprise and asset values that could be avoided with more careful planning and sound, experience-based legal advice.

Whether you are experiencing financial distress or are in a business relationship with a party experiencing financial distress, or are seeking to strategically acquire assets from bankrupt or insolvent entities, Fox Swibel can assist you. We are dedicated, eager and fully prepared to offer restructuring, insolvency and bankruptcy planning and advice to all clients in an efficient, cost-effective manner, whether they be borrowers or lenders, landlords or tenants, employers or employees, investors or investment firms, start-ups or mature companies.  Our depth and breadth of experience in workouts, restructuring, insolvency-related issues, distressed asset acquisitions, receiverships and bankruptcy matters, and in a host of related practice areas typically utilized in any financial distress situation — including litigation, real estate, corporate, finance, labor and tax (read more here) — make us uniquely positioned to service all of the needs of any business navigating complex financial distress issues.

For distressed businesses, our vast workout experience, including our experience representing both borrowers and lenders, enables us to effectively craft strategies that typically lead to successful outcomes (read more here).  We also have an extensive network of relationships with financial advisors, accountants and other specialists who partner with us in structuring and consummating successful workouts for our clients.

For our creditor clients, including banks, insurance companies, leasing companies and other lenders, and suppliers, we have collectively, among our group members, decades of experience in enforcing their rights and representing their interests in workouts, bankruptcies, distressed collateral sales and an array of other insolvency-related matters both in and out of bankruptcy cases.  Our representation of medium to large creditor clients has placed us in some of the larger national cases in which we have achieved superior results (read more here).  However, we are equally skilled and experienced in achieving excellent results for creditors in smaller to mid-sized insolvency-related matters, including by conducting collateral and loan due diligence to identify potential weaknesses in the lender’s position before pursuing a workout; negotiating loan restructurings and forbearance agreements; preparing and prosecuting foreclosure actions; defending against fraudulent conveyance, preference and similar lender liability claims both in and out of the bankruptcy context; pursuing relief from the automatic stay in bankruptcy cases, protecting contractual rights in bankruptcy cases and objecting to confirmation of plans where appropriate; and structuring competitive auction sales of collateral in order to maximize recoveries (read more here).

We have also represented many clients seeking to acquire assets out of distressed situations, including in connection with competitive bankruptcy auctions (read more here). Our sophisticated corporate and mergers & acquisitions practice, combined with our knowledge of insolvency law, enables us to minimize for clients the unique legal risks associated with such distressed asset acquisitions.

Increasingly, our creditor clients must negotiate with trustees, receivers and assignees for the benefit of creditors, as parties seek to avoid the usually greater expense of a bankruptcy case.  Here again, our wealth of experience makes us uniquely qualified to represent clients in such matters.  One of our attorneys has served and continues to serve as trustee or receiver in a broad range of cases with the firm as his general counsel, and in those cases we have obtained substantial results for creditors (read more here).

Our firm’s breadth and depth of knowledge in all aspects of insolvency and workout matters, and our efficient business approach to solving clients’ problems, make us a popular choice for a wide array of clients. That value proposition – sophisticated, experienced legal talent at reasonable rates – was even recognized by the U.S. Treasury Department during the last economic downturn in 2008-2011.  When Treasury was faced with a deep recession and a need to inject capital into middle market banks throughout the country, we were one of three law firms selected by Treasury to close over 165 transactions (for a total of $1.7 billion) in 2011 as part of its Small Business Lending Fund Program.  This proud moment in our firm’s history further demonstrates our ability, sophistication, and skill that we are eager to bring to the full benefit of all of our clients seeking to successfully navigate these turbulent times.

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Feel free to read more here about the profiles of the attorneys who have experience in the respective legal areas referenced above, and to call on us if we can be of any assistance.

[1] Fox Swibel – General Practice Areas

For a general overview of the firm’s practice areas and profiles of attorneys in each area, please see our website here.

[2] Attorneys’ Representative Engagements – Debtors and Borrowers:

• Represented financial advisory firm Leavitt Capital Management (with over $600 million in assets under management) in out-of-court restructuring following sudden death of firm’s principal, resulting in successful stabilization of company and sale of business to third party purchaser;
• Represented major Chicago-area funeral home on forbearance agreement and loan workout with major secured creditor, corporate restructuring of underlying business and ongoing real estate development project;
• Represented debtor in the sale of the assets of National Envelope Company under chapter 11 of the Bankruptcy Code;
• Represented debtor in the sale of the assets of GST Telecommunications pursuant to chapter 11; and,
• Represented Evans, Inc. in its chapter 11 reorganization and sale.

[3] Attorneys’ Representative Engagements – Creditors and Institutional Clients in National Cases:

• Enforced (and currently enforcing) insurers’ rights to collect amounts due from their bankrupt insureds, often involving claims by the insurers in the tens of millions of dollars, in venues throughout the country, including the United States Supreme Court, in cases such as Verity Health Systems, Trident USA, Barneys New York, Avenue Stores, Payless Holdings, Toys “R” Us, EXCO Resources, hhgregg, Abeinsa Holdings, Exide Technologies, Howard Delivery, Caesars Entertainment Operating Company, Eastman Kodak, Patriot Coal Company, Washington Mutual, Inc., Circuit City Stores, Inc., and WorldCom;
• Represented landlord creditor in enforcement of its rights and claims in the Caesars Entertainment Operating Company, Inc. bankruptcy case;
• Represented active corporate creditor member of Unsecured Creditors’ Committee in chapter 11 case of Qualteq, Inc. in Chicago, on all aspects of its role on the committee, including devising strategy for unsecured creditor recovery and analyzing the debtor’s reorganization prospects and plan of reorganization, in case that resulted in 100% payout to unsecured creditors;
• Represented one of the largest privately held corporations in North America in its role as member of the Unsecured Creditors’ Committee of CST Industries, and as a corporate creditor of CST Industries, in connection with CST’s chapter 11 restructuring proceedings in Delaware;
• Represented one of the country’s largest suppliers of garage door systems in defending its rights as a creditor in the Sears bankruptcy case, including defending supplier against multi-million dollar preference claim which was favorably settled for a modest five figure amount;
• Represented several unsecured creditors against alleged preference liability in Sears bankruptcy case, including negotiating settlements of the same;
• Represented Unsecured Creditors’ Committee of Highland Superstores, Inc.,  a national consumer electronics chain, in multiple aspects of Highland’s chapter 11 case;
• Represented one of the sponsor group defendants in connection with a bankrupt national retail chain in connection with landlord assertions of fraud against the sponsor group; and,
• Represented one of the private equity defendants in a fraudulent transfer/breach of fiduciary duty case involving a portfolio of bankrupt national department stores with respect to which the amount in controversy exceeded $1 billion.

[4] Attorneys’ Representative Engagements – Creditors Generally:

• Represented a group of Japanese banks as part of a larger bank group agented by Citicorp in connection with the restructuring and foreclosure of loans secured by certain parcels of real estate in Century City, Los Angeles, California;
• Represented major national bank in connection with the workout of various construction loans, including for a Walgreens store in Grass Valley, California, retail centers anchored by Bass Pro stores in Hanover County, Virginia and Portage, Indiana, and a hospital complex in Chicago, Illinois. The workouts involved restructuring the loans to pay down a portion of the principal balance, creating additional financial covenants, cross-defaulting to other secured properties, changing the interest rate structure, extending the maturity date and other terms;
• Successfully defended a multi-billion-dollar pension fund lender, against multi-million dollar lender liability claims in Illinois state court, ultimately pressuring the borrower into a very favorable settlement for the lender client;
• Represented a major national bank in connection with a forbearance agreement and follow-on deed in lieu transaction involving a large-scale apartment complex in Chicago;
• Represented middle-market bank in realizing near full value for its collateral in the chapter 11 case of In re GAC Lansing, LLC (Case No. 11-40944) in Chicago, principally through aggressive automatic stay litigation followed by a settlement in which the firm took a lead role in structuring the auction for the sale of the collateral and a dismissal in which creditors obtained a 95% recovery on their claims;
• Represented middle market bank, as secured lender, in the analysis of the lender’s options for maximization of the value of collateral securing multi-million dollar loans to a national real estate developer involving multiple jurisdictions (including potential restructuring of debt and evaluation of forbearance proposals), and in the eventual foreclosure on properties, structuring of receivership for certain properties and structuring and implementation of strategies for post-foreclosure sale of recovered property;
• Represented a leading healthcare finance company as a secured lender and equipment lessor  in numerous hospital and skilled nursing facility reorganizations and bankruptcies;
• Represented various middle-market banks and secured creditors, in loan restructurings and workouts with various borrowers, and enforcement of their collateral rights in non-bankruptcy and bankruptcy contexts (including automatic stay litigation and settlements related thereto); and,
• Currently serving as national bankruptcy counsel for a large healthcare insurance company in over 20 active healthcare provider and pharmaceutical company bankruptcy cases.

[5] Attorneys’ Representative Engagements – Investors in or Purchasers of Distressed Assets:

• Represented purchaser in the acquisition of the assets of Cardiac Science Corporation under chapter 11;
• Represented purchaser in the acquisition of DayMen International in an out of court debt restructuring;
• Represented purchaser in the acquisition of Medical Staffing Networks, Inc. under chapter 11;
• Represented successful stalking horse bidder in acquisition of assets from chapter 11 bankruptcy estate of F-Squared Investment Management, LLC (Delaware);
• Represented stalking horse bidder in competitive and attempted acquisition of substantially all the assets of chapter 11 bankruptcy estate of Naperville Theater, LLC;
• Represented one of the country’s largest privately-held companies, in its successful strategic acquisition of $22 million of assets of Agway, Inc. through a bankruptcy auction and its competitive bidding for over $450 million of assets from the bankruptcy estate of Farmland Foods;
• Represented purchaser in the acquisition of six ethanol plants from VeraSun pursuant to a sale process under chapter 11;
• Represented a real estate company in connection with the auction of the Old Post Office in Chicago, IL.; and,
• Represented a real estate company in connection with its acquisition of assets in the Toys “R” Us bankruptcy.

[6] Attorneys’ Representative Engagements – Trustees, Receivers and Other Fiduciaries:

• Served (or currently serving) as court-appointed trustee in thousands of individual and corporate bankruptcy cases since original appointment to chapter 7/11 bankruptcy trustee panel in 1994, and administering assets of small, intermediate and large estates, including (i) securing and stabilizing real estate and other corporate assets, (ii) hiring professionals to assist with administration of the bankruptcy estate, (iii) where necessary, temporarily operating distressed businesses to facilitate liquidation of assets, (iv) investigating and pursuing claims against insiders and third parties, and (v) marketing, negotiating and closing the sale of assets in all categories (including commercial and residential real estate and receivables);
• Serving as court-appointed receiver in S.E.C v. Northridge Holdings Ltd., et al., Case No. 19-cv-5957 (N.D. Ill.), where the firm is also general counsel, with responsibility for overseeing the management and liquidation of nearly 1000 units of multi-family housing estimated to be worth in excess of $80 million, and investigating potential claims, including against defendants’ insiders;
• Representing the chapter 7 bankruptcy trustee as special counsel in the ongoing In re Lancelot Investors Fund, L.P., et al. (Case No. 08-28225) bankruptcy case, in which the debtor prepetition held assets in excess of $1.8 billion, investigating and successfully pursuing claims (including fraudulent conveyance claims) that realized tens of millions of dollars in cash recoveries for the estate;
• Representing the chapter 7 bankruptcy trustee as general counsel for the bankruptcy estate of Johnson Publishing Company, LLC (Case No. 19-10236), including serving as lead counsel in the trustee’s successful sale of the Johnson Publishing iconic archive of African-American photos and other media items collected since WWII, to a consortium of foundations for $30 million;
• Representing court-appointed receiver of the City of Harvey water system and water fund, assisting receiver in structuring and implementing legal strategies to ensure the legal disposition of cash flow within the Water Department in compliance with consent decree and Illinois law, and investigating and recovering alleged fraudulent or unauthorized historical transfers of cash from the water fund;
• Represented assignee for the benefit of creditors of Leavitt Capital Management in administration of assignment trust for the benefit of Leavitt Capital Management’s creditors;
• Represented court-appointed receiver in Triad Equity Group case that was concluded in Cook County Chancery Court, including advising receiver on fiduciary duties, negotiating and documenting sale of real estate assets, evaluating and resolving disputes with respect to creditor claims against receivership estate assets, and reviewing and editing receivership reports;
• Represented the bankruptcy trustee of marchFIRST, Inc., a former internet consulting firm, which pre-bankruptcy had a market capitalization in excess of $7 billion, in a multi-year liquidation of the estate’s assets and litigation of avoidance claims;
• Represented the court-appointed examiner in the structuring and administration of the successful auction of $50 million of assets of RHC Spacemaster, a manufacturing company;
• Represented bankruptcy trustee in the sale of the assets of DVI Financial Services, Inc. under chapter 7; and,
• Represented various chapter 7 trustees (and/or serving as chapter 7 trustee) in numerous Chicago middle market bankruptcy cases, investigating and pursuing multiple claims (including fraudulent conveyance, preference and successor liability claims) that realized hundreds of thousands of dollars for those respective estates and their creditors, including In re CLC Industries, Inc. (Case No. 12-04931), In re MAK Express (Case No. 10-36923), In re H. H. Holmes Testing Laboratories, Inc. (Case No. 10-55500), In re P & P Realty (Case No. 11-18133),  In re Scientific Window, Inc. (Case No. 09-17180) and In re Commercial Resources Construction Company (Case No. 10-28842).

[7] Profiles of Attorneys with Substantial Workout, Restructuring and/or Bankruptcy Experience:

Margaret M. Anderson
N. Neville Reid
Ryan T. Schultz
Jennifer L. Sucher

Laurie A. Levin
Richard S. Meller
David J. Morris
Jill A. Coleman

This article contains material of general interest and should not be construed as legal advice or a legal opinion on any specific facts or circumstances.  Under applicable rules of professional conduct, this content may be regarded as attorney advertising.