WEBVTT
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You are listening to Corporate Bankruptcy A to Z, a podcast that gives you the ins and outs of corporate bankruptcy.
00:00:35.510 --> 00:00:42.710
This is an abbreviated release of episode 10, where we will cover contracts and court oversight, the role of the U.S.
00:00:42.870 --> 00:00:51.030
trustee, required reporting, the formation of creditor committees, and how decisions are challenged throughout the case.
00:00:51.269 --> 00:01:00.390
If you are new to the show or want to hear the full conversation about this topic and more, we invite you to check out our full bankruptcy series down below in the show feed.
00:01:00.550 --> 00:01:05.590
There you will find an unedited version of each episode where we dig deeper and answer more questions.
00:01:05.829 --> 00:01:12.950
Corporate Bankruptcy A-Z is hosted by Neil Goldstein, a chief restructuring officer with over 30 years experience.
00:01:13.189 --> 00:01:20.870
He is joined by co-host and legal expert Steve Raven of CellUI, a bankruptcy attorney with over 40 years in the field.
00:01:21.189 --> 00:01:26.310
If you are dealing with a situation now and need guidance, you can reach out to them directly.
00:01:26.550 --> 00:01:36.070
Call Neil at 940-808-9451 and Steve at 973-286-6713.
00:01:37.829 --> 00:01:41.750
For this episode, we have a special guest, Joe Marshall.
00:01:41.989 --> 00:01:43.590
What is the role of the U.S.
00:01:43.750 --> 00:01:46.070
Trustees Office in a corporate case?
00:01:46.230 --> 00:01:48.549
And when do they get involved, Joe?
00:01:49.269 --> 00:01:49.989
Well, the U.S.
00:01:50.070 --> 00:01:52.549
Trustees Office gets involved from day one.
00:01:52.629 --> 00:02:04.710
I mean, the the first thing that I I think they really do is look at the filing itself and determine, you know, did the company file in the correct venue and and does it qualify for chapter 11?
00:02:04.870 --> 00:02:13.750
And they oversee some of the filing reportings that's done by the company throughout the case, the monthly operating reports.
00:02:13.829 --> 00:02:18.710
Um and they'll look at the schedules and statements, the initial disclosures by the company.
00:02:19.670 --> 00:02:22.790
Joe, you said that reports are filed.
00:02:23.110 --> 00:02:26.150
What reports are filed and how often are they filed?
00:02:27.349 --> 00:02:41.189
It's a listing of all the assets and the claims and the contracts and and some of the prior history, uh recent history of the financial performance of the company, among other things, owners and owners' interest transactions.
00:02:41.430 --> 00:02:44.229
Those are filed within the first couple of weeks of the case.
00:02:44.469 --> 00:02:52.629
Sometimes extensions are granted, but that that's a one-time filing at the outset to fully disclose to creditors what's going on with the company.
00:02:52.870 --> 00:03:02.550
The more regular reporting are the monthly operating reports that show the revenue and the expenses that the company incurs on a monthly basis.
00:03:03.830 --> 00:03:06.710
Well, let's turn to the creditors committee now.
00:03:06.949 --> 00:03:10.310
What is a creditors committee and when is it formed?
00:03:10.949 --> 00:03:15.990
Well, so the creditors committee is comprised of unsecured creditors.
00:03:16.229 --> 00:03:22.550
If you can imagine an unsecured creditor, particularly in a large case, really has very little leverage.
00:03:22.710 --> 00:03:30.229
Unless they're a major vendor of the company, they may have a claim that's just swamped by the lender's claim.
00:03:30.390 --> 00:03:40.310
And they may just may not have the leverage and they may not want to spend the money individually to hire lawyers and financial consultants throughout the case to protect just their individual interests.
00:03:40.469 --> 00:03:59.909
So the so the bankruptcy cases and the and the code contemplate a committee to be formed, and typically, on average, you know, five to seven unsecured creditors are appointed, can be sometimes less, sometimes more, that form the committee, and that committee is a con is a very important constituent in the case.
00:04:00.069 --> 00:04:05.669
They they then have leverage as they're representing all unsecured creditors.
00:04:05.750 --> 00:04:20.149
And if you join the committee as a member, you're not on that committee for your particular interest, you're representing all of the unsecured creditors, and they hire attorneys, they can hire financial consultants, and all that's paid by the estate.
00:04:20.310 --> 00:04:29.350
Uh but it's an it's an important, important constituency, and it's usually formed at the initiation of the case, as quickly as possible.
00:04:30.550 --> 00:04:32.629
Are they formed in all cases?
00:04:33.909 --> 00:04:35.509
They're not formed in all cases.
00:04:35.750 --> 00:04:39.029
I would say in most larger cases, uh they are.
00:04:49.990 --> 00:04:52.309
What rights does the committee have?
00:04:53.190 --> 00:04:56.470
Can it appeal to the court for certain rulings?
00:04:56.789 --> 00:05:00.230
Does it have any rights against the estate?
00:05:01.269 --> 00:05:02.230
That's a great question.
00:05:02.389 --> 00:05:06.389
They they appear in almost every proceeding, every hearing.
00:05:06.549 --> 00:05:25.750
They can file objections, they can contest what the company is doing, they can challenge the bank on what it's attempting to do in the case, they can review and challenge the liens of the bank, they can look at prepetitioned transactions that were entered into between the company, the bank, and other parties.
00:05:26.070 --> 00:05:42.710
Interestingly, in a cash collateral dispute, one of the issues that comes up is the committee may want to have certain money set aside or in the budget that they can use their attorneys and financial consultants to go review the validity of the liens of the bank.
00:05:43.190 --> 00:05:58.950
It sounds like the creditors committee can negotiate, if not in rule of law, at least to create a disturbance, causing the secured lender maybe to negotiate something for them that they ordinarily wouldn't have.
00:05:59.509 --> 00:06:00.470
They absolutely can.
00:06:00.549 --> 00:06:02.710
They can do it throughout the case.
00:06:02.950 --> 00:06:18.230
And we've also seen it, and and in fact, I represented a committee years ago that in a case where we were able to challenge the debtor's plan and file a competing plan and had the competing plan confirmed over the debtor's plan.
00:06:18.389 --> 00:06:20.549
The judge considered both at the same time.
00:06:20.710 --> 00:06:26.710
And so the committee can absolutely impact the the outcome of the case.
00:06:27.750 --> 00:06:35.909
Joe, you said the estate pays the expenses for the committee, but the expenses really are paid by the debtor.
00:06:36.389 --> 00:06:42.149
The creditors committee can engage attorneys, accountants, consultants.
00:06:42.710 --> 00:06:45.830
So it could get kind of costly, correct?
00:06:46.549 --> 00:06:48.629
Yes, it can get very costly.
00:06:48.789 --> 00:07:03.909
In a large case, all of that is borne by say the estate, it's the company, it's it's the bankruptcy estate, but they the company pays it, and it's gotta be in the budget, and sometimes affects the feasibility of a case.
00:07:04.070 --> 00:07:04.789
Absolutely.
00:07:06.710 --> 00:07:12.230
When should a company start working on its restructuring plan and when is it filed?
00:07:13.590 --> 00:07:22.870
So a company really should begin its efforts to put together the restructuring plan before the case is even filed, ideally.
00:07:23.590 --> 00:07:28.549
Chapter 11 is not something you want to go into unprepared or at the last minute.
00:07:28.629 --> 00:07:33.750
There are emergency chapter 11s filed on based on a lot of unexpected reasons.
00:07:33.990 --> 00:07:43.269
But if it's a planned chapter 11, you're at least having an idea of how your your different paths are going to look coming out of Chapter 11.
00:07:43.350 --> 00:07:52.549
And so you've already, if nothing else, you've started to outline in your mind and with the company's officers what a plan would look like for this company.
00:07:52.789 --> 00:07:55.029
Do you have a question about bankruptcy?
00:07:55.190 --> 00:07:56.950
Why not ask the experts?
00:07:57.190 --> 00:07:59.990
Emails for Neil and Steve can be found in the show notes below.
00:08:00.070 --> 00:08:02.950
And remember, the first call is always free.
00:08:03.190 --> 00:08:12.549
Call Neil at 940-808-9451 and Steve at 973-286-6713.
00:08:13.110 --> 00:08:15.590
You can also find more resources on our website.
00:08:15.830 --> 00:08:20.470
Go to corporate bankruptcyagens.com or elementary business.com.
00:08:20.629 --> 00:08:23.190
You can also find links to those in the show notes down below.
00:08:23.509 --> 00:08:28.710
Corporate Bankruptcy Agency Podcast and YouTube channel are produced by me, Sir ITEXMET.
00:08:29.029 --> 00:08:32.789
Be sure you subscribe and share the episode, and we will see you next time.
00:00:28.870 --> 00:00:35.350
You are listening to Corporate Bankruptcy A to Z, a podcast that gives you the ins and outs of corporate bankruptcy.
00:00:35.510 --> 00:00:42.710
This is an abbreviated release of episode 10, where we will cover contracts and court oversight, the role of the U.S.
00:00:42.870 --> 00:00:51.030
trustee, required reporting, the formation of creditor committees, and how decisions are challenged throughout the case.
00:00:51.269 --> 00:01:00.390
If you are new to the show or want to hear the full conversation about this topic and more, we invite you to check out our full bankruptcy series down below in the show feed.
00:01:00.550 --> 00:01:05.590
There you will find an unedited version of each episode where we dig deeper and answer more questions.
00:01:05.829 --> 00:01:12.950
Corporate Bankruptcy A-Z is hosted by Neil Goldstein, a chief restructuring officer with over 30 years experience.
00:01:13.189 --> 00:01:20.870
He is joined by co-host and legal expert Steve Raven of CellUI, a bankruptcy attorney with over 40 years in the field.
00:01:21.189 --> 00:01:26.310
If you are dealing with a situation now and need guidance, you can reach out to them directly.
00:01:26.550 --> 00:01:36.070
Call Neil at 940-808-9451 and Steve at 973-286-6713.
00:01:37.829 --> 00:01:41.750
For this episode, we have a special guest, Joe Marshall.
00:01:41.989 --> 00:01:43.590
What is the role of the U.S.
00:01:43.750 --> 00:01:46.070
Trustees Office in a corporate case?
00:01:46.230 --> 00:01:48.549
And when do they get involved, Joe?
00:01:49.269 --> 00:01:49.989
Well, the U.S.
00:01:50.070 --> 00:01:52.549
Trustees Office gets involved from day one.
00:01:52.629 --> 00:02:04.710
I mean, the the first thing that I I think they really do is look at the filing itself and determine, you know, did the company file in the correct venue and and does it qualify for chapter 11?
00:02:04.870 --> 00:02:13.750
And they oversee some of the filing reportings that's done by the company throughout the case, the monthly operating reports.
00:02:13.829 --> 00:02:18.710
Um and they'll look at the schedules and statements, the initial disclosures by the company.
00:02:19.670 --> 00:02:22.790
Joe, you said that reports are filed.
00:02:23.110 --> 00:02:26.150
What reports are filed and how often are they filed?
00:02:27.349 --> 00:02:41.189
It's a listing of all the assets and the claims and the contracts and and some of the prior history, uh recent history of the financial performance of the company, among other things, owners and owners' interest transactions.
00:02:41.430 --> 00:02:44.229
Those are filed within the first couple of weeks of the case.
00:02:44.469 --> 00:02:52.629
Sometimes extensions are granted, but that that's a one-time filing at the outset to fully disclose to creditors what's going on with the company.
00:02:52.870 --> 00:03:02.550
The more regular reporting are the monthly operating reports that show the revenue and the expenses that the company incurs on a monthly basis.
00:03:03.830 --> 00:03:06.710
Well, let's turn to the creditors committee now.
00:03:06.949 --> 00:03:10.310
What is a creditors committee and when is it formed?
00:03:10.949 --> 00:03:15.990
Well, so the creditors committee is comprised of unsecured creditors.
00:03:16.229 --> 00:03:22.550
If you can imagine an unsecured creditor, particularly in a large case, really has very little leverage.
00:03:22.710 --> 00:03:30.229
Unless they're a major vendor of the company, they may have a claim that's just swamped by the lender's claim.
00:03:30.390 --> 00:03:40.310
And they may just may not have the leverage and they may not want to spend the money individually to hire lawyers and financial consultants throughout the case to protect just their individual interests.
00:03:40.469 --> 00:03:59.909
So the so the bankruptcy cases and the and the code contemplate a committee to be formed, and typically, on average, you know, five to seven unsecured creditors are appointed, can be sometimes less, sometimes more, that form the committee, and that committee is a con is a very important constituent in the case.
00:04:00.069 --> 00:04:05.669
They they then have leverage as they're representing all unsecured creditors.
00:04:05.750 --> 00:04:20.149
And if you join the committee as a member, you're not on that committee for your particular interest, you're representing all of the unsecured creditors, and they hire attorneys, they can hire financial consultants, and all that's paid by the estate.
00:04:20.310 --> 00:04:29.350
Uh but it's an it's an important, important constituency, and it's usually formed at the initiation of the case, as quickly as possible.
00:04:30.550 --> 00:04:32.629
Are they formed in all cases?
00:04:33.909 --> 00:04:35.509
They're not formed in all cases.
00:04:35.750 --> 00:04:39.029
I would say in most larger cases, uh they are.
00:04:49.990 --> 00:04:52.309
What rights does the committee have?
00:04:53.190 --> 00:04:56.470
Can it appeal to the court for certain rulings?
00:04:56.789 --> 00:05:00.230
Does it have any rights against the estate?
00:05:01.269 --> 00:05:02.230
That's a great question.
00:05:02.389 --> 00:05:06.389
They they appear in almost every proceeding, every hearing.
00:05:06.549 --> 00:05:25.750
They can file objections, they can contest what the company is doing, they can challenge the bank on what it's attempting to do in the case, they can review and challenge the liens of the bank, they can look at prepetitioned transactions that were entered into between the company, the bank, and other parties.
00:05:26.070 --> 00:05:42.710
Interestingly, in a cash collateral dispute, one of the issues that comes up is the committee may want to have certain money set aside or in the budget that they can use their attorneys and financial consultants to go review the validity of the liens of the bank.
00:05:43.190 --> 00:05:58.950
It sounds like the creditors committee can negotiate, if not in rule of law, at least to create a disturbance, causing the secured lender maybe to negotiate something for them that they ordinarily wouldn't have.
00:05:59.509 --> 00:06:00.470
They absolutely can.
00:06:00.549 --> 00:06:02.710
They can do it throughout the case.
00:06:02.950 --> 00:06:18.230
And we've also seen it, and and in fact, I represented a committee years ago that in a case where we were able to challenge the debtor's plan and file a competing plan and had the competing plan confirmed over the debtor's plan.
00:06:18.389 --> 00:06:20.549
The judge considered both at the same time.
00:06:20.710 --> 00:06:26.710
And so the committee can absolutely impact the the outcome of the case.
00:06:27.750 --> 00:06:35.909
Joe, you said the estate pays the expenses for the committee, but the expenses really are paid by the debtor.
00:06:36.389 --> 00:06:42.149
The creditors committee can engage attorneys, accountants, consultants.
00:06:42.710 --> 00:06:45.830
So it could get kind of costly, correct?
00:06:46.549 --> 00:06:48.629
Yes, it can get very costly.
00:06:48.789 --> 00:07:03.909
In a large case, all of that is borne by say the estate, it's the company, it's it's the bankruptcy estate, but they the company pays it, and it's gotta be in the budget, and sometimes affects the feasibility of a case.
00:07:04.070 --> 00:07:04.789
Absolutely.
00:07:06.710 --> 00:07:12.230
When should a company start working on its restructuring plan and when is it filed?
00:07:13.590 --> 00:07:22.870
So a company really should begin its efforts to put together the restructuring plan before the case is even filed, ideally.
00:07:23.590 --> 00:07:28.549
Chapter 11 is not something you want to go into unprepared or at the last minute.
00:07:28.629 --> 00:07:33.750
There are emergency chapter 11s filed on based on a lot of unexpected reasons.
00:07:33.990 --> 00:07:43.269
But if it's a planned chapter 11, you're at least having an idea of how your your different paths are going to look coming out of Chapter 11.
00:07:43.350 --> 00:07:52.549
And so you've already, if nothing else, you've started to outline in your mind and with the company's officers what a plan would look like for this company.
00:07:52.789 --> 00:07:55.029
Do you have a question about bankruptcy?
00:07:55.190 --> 00:07:56.950
Why not ask the experts?
00:07:57.190 --> 00:07:59.990
Emails for Neil and Steve can be found in the show notes below.
00:08:00.070 --> 00:08:02.950
And remember, the first call is always free.
00:08:03.190 --> 00:08:12.549
Call Neil at 940-808-9451 and Steve at 973-286-6713.
00:08:13.110 --> 00:08:15.590
You can also find more resources on our website.
00:08:15.830 --> 00:08:20.470
Go to corporate bankruptcyagens.com or elementary business.com.
00:08:20.629 --> 00:08:23.190
You can also find links to those in the show notes down below.
00:08:23.509 --> 00:08:28.710
Corporate Bankruptcy Agency Podcast and YouTube channel are produced by me, Sir ITEXMET.
00:08:29.029 --> 00:08:32.789
Be sure you subscribe and share the episode, and we will see you next time.
