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Business & Commercial Bankruptcy Archives

Sears bankruptcy will have varied impacts on others

By now, the news of the bankruptcy filing by Sears is well known. Many Sears stores will close, and many employees will lose their jobs. But, what about firms that sell goods and services to Sears or rent space to Sears? Preliminary analyses of the retail market appear to show that some firms will benefit from the Sears bankruptcy and others will be harmed. The extent of both harmful and beneficial effects cannot yet be measured with fine accuracy, but preliminary studies of Sears' situations provide a few informative hints.

Retailing icon Sears on verge of bankruptcy

Another retailing icon appears to be edging toward a bankruptcy filing. Sears, one of the most recognized names in American retailing, is expected to file a business bankruptcy petition. The decline of Sears appears to be the result of a changing retail climate in the country and a serious of questionable management decisions.

Jurisdiction of U. S. bankruptcy courts

Rockland County businesses and individuals who are contemplating the filing of a petition in bankruptcy court rarely stop to wonder why Congress created a special court to handle bankruptcy cases. The creation of bankruptcy courts and the defining of their jurisdiction is a long and complicated history. A review of the last several decades of this history may help our readers understand why the bankruptcy court is different from other U.S. courts.

Seasons Kosher Supermarkets files Chapter 11 petition

Another grocery chain has decided to seek protection from creditors by filing a Chapter 11 petition. Seasons Kosher Supermarkets, based in Flushing, N.Y., filed its petition in the Eastern District of New York on September 16. An announcement by the company that accompanied the filing indicates that the chain is attempting to arrange interim financing that will allow it to remain in business during the Chapter 11 proceeding.

Developer turns to bankruptcy to save Washington Heights project

Most residents of Rockland County and New York City view bankruptcy solely as a means for eliminating burdensome debts. However, a bankruptcy proceeding can often be used for other purposes, as a recent filing in the bankruptcy court in the Southern District of New York has demonstrated.

Rockland firm sued to prevent discharge of debt based on fraud

The United States Bankruptcy Code excludes several types of claims from the discharge provisions. Perhaps the most common exception is a debt obtained by fraud. The code states that a discharge in bankruptcy does not apply to a debt "for money, property [or] services . . . to the extent obtained by false pretenses, a false representation, or actual fraud. . . ." A Rockland steel fabricating company is now being sued by a Florida firm for allegedly making fraudulent statements that induced it to ship steel.

The treatment of executory contracts in bankruptcy

Most businesses in Rockland County attempt to avoid dealing with a business that has filed for bankruptcy under either Chapter 7 or Chapter 11. The chances of being paid for goods and services is obviously reduced if the other party is a bankruptcy petitioner. One of the most serious risks is to have a contract with a debtor rejected, even though the debtor is legally obligated to perform according to the contract. Such contracts are known as "executory contracts," and they receive special treatment under the Bankruptcy Code.

Hotel investors look to bankruptcy to save the business

Many New York businessmen look on bankruptcy as the end of a business, but some investors look to bankruptcy as the only path to resurrecting the business. A prime example of using bankruptcy to save a business instead of dismember it was recently provided by the TIME Nyack Hotel.

Buying a business out of bankruptcy can be profitable - and risky

Many business and commercial bankruptcies in Rockland County and elsewhere end up with the assets of the enterprise being sold to an investor who intends to reinvigorate the company and turn it into a profitable enterprise. The lure of purchasing a bankrupt company is the reduced price of the assets. On the other hand, rehabbing a bankrupt company can be very expensive and risky.

What is a 'voidable preference' in bankruptcy?

Let's imagine that you own and operate a business in Rockland County. You have a customer who owes you money for goods that were bought at various times during the last year. You learn that the customer is experiencing financial difficulties and may have trouble paying his debts. You take the obvious action and ask the customer for payment. The customer pays one-third of what he owes and promises more later. Instead of "more," however, the customer files a bankruptcy petition two weeks later. Bad news, but at least you were paid some of what the customer owes. You shrug and think things could be worse. You file your notice of claim for the balance owed to you and wait. But instead of receiving money from the bankruptcy trustee, you receive a federal court complaint seeking to recover the money paid to you before the bankruptcy. How can this be?

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