Straw, Gold, Extortion, Bureaucrats, Conspiracy, Furriners and Other Methods of Finding Assets

03/20/2003

Straw, Gold, Extortion, Bureaucrats, Conspiracy, Furriners  and Other Methods of Finding Assets in an Insolvent Estate

INTRODUCTION

When a debtor files for Chapter 11 bankruptcy protection, both creditors and debtors begin the process of evaluating the estate to determine what assets are available for distribution to creditors.   Often, the secured lenders have valid security interests in the identifiable assets of the estate apparently leaving nothing for the unsecured creditors.  Occasionally, the assets are claimed by the representatives of foreign debtors.  More often, undersecured lien creditors can be persuaded to provide some recovery for other constituencies in order to enhance their recovery.  Tax benefits may augment the tangible assets and regulatory requirements may alter the practical application of statutory priorities.  Insurance coverage may also impact the negotiating dynamics.  In these situations, creditors and debtors must be creative in their search for assets.

In order to comply with certain U.S. Treasury regulations, we are informing you that any U.S. federal tax advice that may be contained in this document is not intended or written to be used, and cannot be used, by any person for the purpose of (i) avoiding any tax penalties that may be imposed by the Internal Revenue Service or any other U.S. federal taxing authority or agency or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.

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