Bankruptcy Law and Insolvency Law

Companies facing financial distress often miss early warning signs that could mean the difference between recovery and insolvency. From maxed-out credit lines and covenant breaches to deteriorating fundamentals and reporting red flags, recognizing these indicators early allows businesses to engage turnaround advisors who bring critical experience and perspective to navigate challenges before they become crises.

In bankruptcies, a debtor or trustee may claw back legitimate payments the debtor made to its creditors within 90 days prior to filing of bankruptcy. In general terms, a preference claim is a transfer made (a) to or for the benefit of a creditor; (b) for or on account of antecedent debt owed by the debtor; (c) while the debtor was insolvent (liabilities exceed assets); (d) within 90 days before the bankruptcy petition was filed or one year if made to an insider; (e) such that it allows the creditor to receive more than it would have received if the debtor had not made the payment and the claim was paid through the bankruptcy process.

Sheppard’s Restructure THIS! podcast explores the latest trends and controversies in Chapter 11 bankruptcy, commercial insolvency and distressed investing.