EXPERIENCED ASSISTANCE REPRESENTING YOUR INTEREST
AS A CREDITOR
IN BANKRUPCY
Steinfeld & Steinfeld, PC has had over thirty years of experience helping individuals and entities recover their debts in bankruptcy cases. These situations may be relatively simple, involving filing a proof of claim or lifting the automatic stay, or quite complicated including responding to demand letters from a trustee regarding pre-petition transfers of property or filing law suits to preserve rights to collect debts, known as non-dischargeablity complaints. The vast majority of these actions must be taken with precise deadlines. Steinfeld & Steinfeld, PC has experienced counsel to guide you through this process.
Steinfeld & Steinfeld, PC is experienced representing unsecured and secured creditors, helping small companies, as well as large and small corporate creditors and individuals with every type of loan, including leases, navigate their way through the bankruptcy process. The options available vary by Chapter and situation. Having an experienced guide is invaluable.
Motions for Relief from the Automatic Stay and Adequate Protection Payments / Protections of Cash Collateral
Any pre-petition pending litigation and garnishments must stop with very few exceptions. The filing of the Bankruptcy case creates an automatic stay which immediately stops all collection efforts against the Debtor; this includes, but is not limited to: pending law suits, garnishments, foreclosures (real estate and personal property), and repossessions. There are exceptions to the automatic stay, but it is not wise to rely on them, and it is better to get appropriate legal advice. To move forward with legal action, especially in situations involving family law situations, secured collateral, such as vehicles, leases and things of that nature, it is important to obtain the permission of the bankruptcy court through a motion to lift the automatic stay. This is done on motion with the court and with notice to other parties, including the debtor, and the scheduling of a hearing. If there is a need for insurance covering collateral/property, there are exceptions that may be available on an expedited basis. In certain reorganization cases, adequate protection payments may be requested, and paid, pending confirmation of the plan, to protect the creditor. This will arise most often when the creditor’s collateral consists of “cash collateral” under the loan documents arising from a perfected security interest in accounts receivable, cash, and/or rents. In these situations, the parties will either agree to adequate protection payments or the court will mandate them in order to protect the secured creditor’s interests while at the same time enabling the Debtor to operate. Steinfeld & Steinfeld, PC is experienced in obtaining relief for creditors in these situations.
Filing and Litigating Proofs of claim.
In order to recover payment on a claim in bankruptcy, the creditor, secured, unsecured, employee or otherwise, must file a proof of claim in the case on or before the court set deadline, called a bar date. The claim is a form B410 found on the Bankruptcy Court’s website HERE. The filed claim must include certain required information: the creditor’s name, account number, the amount owed as of the date the case was filed, the type of debt and the basis for the claim and documents should be attached supporting the claim, including a breakdown of the amount claimed by principal, interest and other charges. The claim must be signed, under penalty of perjury. The Debtor may then object to the filed claim. If an objection is filed, then the creditor must respond before the deadline for the response. The creditor must then also appear at the scheduled hearing that will be scheduled and held by the Court as set forth in the notice. If the claim is not timely filed, the creditor may be permanently barred from ever being paid anything on its debt.
The 341 First Meeting of Creditors
The Debtor must appear at the 341 First Meeting of Creditors. This is generally held within the first month of the case. It is conducted by the Trustee assigned to the case although the type of trustee conducting the 341 varies by bankruptcy Chapter. The 341 meeting is a perfect opportunity to question the debtor; it is a free mini-deposition. It also sets the deadline for other events to occur in many Chapters, such as deadlines to object to exemptions, to file complaints objecting to discharge and dischargeability or to file an objection to confirmation in Chapter 13. Steinfeld & Steinfeld, PC is happy to work with you to preserve your rights in these situations.
Reviewing and Objecting to Filings in the Case
The Debtor has obligations to file documents in an honest fashion, to truthfully identify his/her/its financial affairs and financial history and, in the case of a Chapter 11, 12 or 13, to forecast income in a way to present a plan for the next, generally, 3 to 5 years. In Chapter 11 cases, the Debtor is filing monthly reports, called “Operating Reports,” disclosing monthly operating income and disclosing its affairs. There is, therefore, significant financial information being disclosed. Additional financial information may be obtained through discovery. A creditor has the ability to monitor and to object to various filings. The creditor may file motions on a proactive basis to appoint a Trustee to take over control of the case, to dismiss the case, or to convert case depending on the circumstances. Experienced counsel aware of the options to protect the creditor’s interests is important in evaluating these alternatives. Steinfeld & Steinfeld, PC has experience with these issues.
Filing and Litigating Objections to Discharge and Dischargeability
When individuals file for bankruptcy, they are generally seeking a discharge. This is a release of debt, or an injunction, precluding the creditor from collecting the discharged debt after the case is filed. The discharge replaces the automatic stay in precluding creditor collection activity against the debtor. There are mechanisms available to the creditor to prevent individual debts from being discharged pursuant to 11 U.S.C. §523 to a specific creditor: there are 19 subsections under §523 some are self-executing, such as those for domestic related obligations, and others, such as those involving fraud, breaches of fiduciary duty, embezzlement, debts incurred by willful and malicious acts, and conversion, affirmatively require that an adversary proceeding, a bankruptcy complaint/law suit, be filed under very strict time deadlines. There is also a mechanism under 11 U.S.C. §727 to deny a debtor’s discharge altogether for certain “bad acts” such as that the debtor transferred or concealed assets, knowingly gave a false oath, or failed to adequately explain a loss of assets. This provision, also, is available only under very strict time constraints and requires that an adversary proceeding be filed. These provisions only apply in certain specific situations, so it is important to have experienced counsel guide you and help you understand when and how they are available in any particular situation. Steinfeld & Steinfeld, PC has achieved numerous favorable outcomes for clients over the decades with discharge and dischargeability actions.
Chapter 11, 12 and 13 Plan Review and Litigation
Debtors in Chapters 11, 12 and 13 propose plans that treat the claims of creditors and pay them a percentage over time. The confirmed plan may become binding on the creditors in a case, sometimes on a very accelerated basis. It is important to review the plan to evaluate its treatment on your claim in order to protect your rights in the case. Once the plan is confirmed, this treatment may be binding and there may be little to be done about it. In order to protect yourself and to be paid, a proof of claim must be filed and, if you oppose how your claim is being treated under the proposed plan, you must file appropriate paperwork (pleadings) to object to the treatment. Steinfeld & Steinfeld PC has decades of experience evaluating the plan, litigating these objections, negotiating and obtaining better treatment for its clients.
Chapter 11 Plan and Disclosure Statement Review, Ballot Voting and Litigation
Chapter 11 is more complex than Chapters 12 and 13. Debtors in Chapter 11 propose a Plan, which oftentimes includes a Disclosure Statement. Both the Plan and Disclosure Statement must be approved by the Court. Debtors can file as a small business, as a single asset real estate case or a subchapter v case. The case can be a Chapter 11 case without one of these subcategories. These distinctions depend on the amount and type of debt owed by the debtor. These documents are oftentimes lengthy and complex. Creditors have additional rights and remedies and can object to the Disclosure Statement for failing to obtain “adequate information.” Creditors can vote for or against the plan. Secured creditors can file an “1111(b)” election, which is a way of turning an undersecured claim into a fully secured claim with caveats. Creditors can object to the Plan and argue the objection to the court. Creditors can take other action within the case prior to confirmation if the facts and circumstances call for it. Steinfeld & Steinfeld, PC has decades of experience and success representing creditors with these proceedings and can help you evaluate your options.
Litigation against the Creditor in Bankruptcy
The Chapter 7 Trustee or the debtor (called the Debtor in Possession in a Chapter 11 case) may seek to recover transfers made to a creditor prior to the filing. These remedies are authorized under the Bankruptcy Code in order for the bankruptcy case to marshal assets to create a level playing field for all creditors to participate in the bankruptcy case equally. These recovery actions include: preferences, fraudulent transfers and other actions as authorized under state law. They also include unauthorized post-petition transfers. Preferences are payments made, or obtained by garnishment, or liens received, within 90 days before the filing of the bankruptcy case (expanded to a year for “insiders”). There a number of defenses available to a preference defendant, and Steinfeld & Steinfeld, PC is experienced in assisting the preference defendant with identifying these defenses.
The fraudulent transfer provision allows recoveries back as far as two years under the Bankruptcy Code and may be as far back as that allowed under the state law fraudulent transfer recovery window, and generally does not require actual fraudulent intent, only a failure of consideration. This provision allows the unwinding of items like real estate deeds transferred for “love and consideration.”
The recovery process will usually begin with a letter to the creditor demanding payment. Such a letter should not be ignored. It is usually followed by an Adversary Proceeding, a lawsuit in the bankruptcy court. This suit must be answered within 30 days of the issuance of the summons. There are oftentimes defenses available to the suit. Steinfeld & Steinfeld PC has decades of experiences successfully navigating these lawsuits and can help.
Putting Skill and Experience to Work for You
Steinfeld & Steinfeld, PC can navigate the complexity of bankruptcy, with its extensive knowledge of the Bankruptcy Code and over thirty years of practice to assist our clients with incredibly complex issues related to a bankruptcy, including commercial debt collection, real estate issues, domestic relations related issues, those involving the small business administration, and more. Steinfeld & Steinfeld, PC, provides the same level of exigence you expect from a large firm, while you receive lawyers who are your experienced personal counsel for the duration of the case.
