Special Assets Lawyer Blog

Assignments for the benefit of creditors are a terrific tool to facilitate the liquidation of assets of a failing enterprise. In this article, my partner, Ben Young, explains why a recent opinion from the California Fourth District Court of Appeal missed the point and why ABCs remain a powerful tool available to get the bank paid.

Assignments for the benefit of creditors (ABC's as they are called) are known for their speed and flexibility. In California, the practice of an ABC occurring followed seconds later by a sale of the assignor's assets is well established. The buyer's ability to take over the failing business quickly in a seamless transition is a principal benefit of the ABC process. The speed and the seamless transition help preserve going concern values for the benefit of creditors.

A recent unpublished decision of a California appellate court appears to question this practice. El Saad v. Tarakji, No. G044716, 2011 WL 5910059 (Cal. Ct. App. Nov. 28, 2011). In Tarakji, Callcom obtained a fraud judgment against West Coast Distributors. One month later, West Coast made an assignment for the benefit of creditors and three days later the assignee sold all of West Coast's assets to Platinum Touch, a newly formed entity owned by West Coast's insiders, for $20,000 cash and the assumption of $4.7 million in purported secured debt.

Continue reading "Must an Assignee for the Benefit of Creditors Give Notice to Creditors Before Selling the Assignor's Assets?" »

As we all know, there are business cycles that affect certain industries. When the going is good, lenders are lining up to make loans, and borrowers are not as picky as one might hope in taking on debt. When the worm turns, however, borrowers often find themselves in financial distress, right along with their competitors.

Currently, we are seeing assisted living facilities running into problems. These borrowers pose special problems for lenders, who must walk a thin line between collecting a bad debt and dispossessing seniors and handicapped persons. The lender handling a troubled assisted living facility wants to avoid taking over the property because the lender is ill-equipped to care for the residents. But how do you do the right thing - both for the bank and for the residents?

Marianne Dickson of our office recently was faced with this dilemma when a bank client called and asked us to move to have a receiver appointed over an assisted living facility. Here is how Marianne dealt with the problem for our client.

Continue reading "Foreclosing on an Assisted Living Facility: What is the lender's role? Who is responsible for patients?" »

Quick! Name a celebrity bankruptcy lawyer!

Drawing a blank? That's because bankruptcy lawyers try hard to keep their clients out of the glare of publicity, and rarely comment on their clients' matters.

So, we were more than pleased when my partner, bankruptcy lawyer par excellence, Bob Kaplan, was featured in the recent Northern California Super Lawyers(R) magazine. Bob is the kind of lawyer who gets the best possible results of his clients in the least possible time. He works on the biggest deals out there, and plenty of smaller ones. He treats each with the utmost importance.

Continue reading "Bankruptcy lawyers in the limelight?" »