Macdonald | Fernandez LLP

MACDONALD | FERNANDEZ LLP


221 Sansome Street
San Francisco, CA 94104
Telephone: (415) 362-0449
Facsimile: (415) 394-5544
914 Thirteenth Street
Modesto, CA 95354
Telephone: (209)549-7949
Facsimile: (209) 236-0172

Thursday, February 19, 2015

The Intersection of Tax and Bankruptcy

This Monday, February 23, 2015, at the City Club of San Francisco, the Bay Area Bankruptcy Forum in cooperation with the Taxation Section and the Commercial Law & Bankruptcy Section of the Bar Association of San Francisco will present "The Intersection of Tax and Bankruptcy."  Reno Fernandez is a member of the Forum's board of directors.

The Intersection of Tax and Bankruptcy



Dennis Bean, CPA
Bean Hunt Harris & Company

Heinz Binder
Binder & Malter, LLP 

Richard Pierotti, CPA
Kokjer, Pierotti, Maiocco & Duck LLP

A. Lavar Taylor
The Law Offices of A. Lavar Taylor

February 23, 2015
5:00 to 7:00 pm

The City Club
155 Sansome Street
San Francisco, California

More information here.

Monday, February 16, 2015

Chapter 11 Reorganization Solutions to Port Strikes and Shipping Delays

A strategic chapter 11 bankruptcy case can provide crucial help to businesses facing delayed shipments of supplies and inventory resulting from the port strikes and shutdowns, including:

  •  The Automatic Stay.  A worldwide injunction goes into effect immediately, preventing creditors from suing, collecting collateral and even calling and harassing the business.  This provides a critical breathing spell.

  •  Adjust Payments to Creditors and Vendors.  Repay creditors in full or in part over time on a schedule that works in light of delayed shipments and delayed sales.

  •  Preserve and Assert Claims.  If the business holds claims against third parties on account of delayed shipments, these are preserved and can be asserted during or after the chapter 11 case.  These can be difficult or impossible to assert if the business is allowed to collapse.

  •  Obtain Operating Cash.  Lenders are reluctant to loan to a distressed company.  However, lenders - including the principals of the company - can make loans on a preferred and protected basis through court-approved DIP financing in chapter 11.

To summarize, a central purpose of chapter 11 is to solve short-term cash flow problems, and it provides good tools to do so.

By Reno Fernandez, a partner with Macdonald Fernandez LLP, a law firm focusing on business bankruptcy, reorganization and commercial litigation.  Macdonald Fernandez LLP helps businesses and individuals file for relief under the Bankruptcy Code throughout California, including Los Angeles, San Diego, the San Francisco Bay Area and the Central Valley, and the firm is a debt relief agency as defined under the Bankruptcy Code.  Advertisement.  Reno can be reached at (415) 362-0449 x 204 or reno@macfern.com.

Thursday, February 12, 2015

Business Bankruptcy Basics

Learn about business bankruptcy basics and earn CLE credit valid in ten states with this video, available here.  The provider, namely LexVid, should give you one video for free.  Here is the course description:

There are a number of complex issues to consider when representing a business client in a bankruptcy.  Join Reno Fernandez, San Francisco commercial bankruptcy attorney, as he covers all the basics of a business bankruptcy case.  The program will focus mostly on corporate Chapter 11 cases, which allows the business to continue to operate with the goal or reorganizing and paying creditors.  Mr. Fernandez will also cover business Chapter 7 cases, which are an effective way to dissolve and wind up if the business does not require a reorganization.  Other topics include discharge, the automatic stay, trustees, and many more.

Chapter 11 Plan Cannot Treat Undersecured Claim as Fully Secured Absent Section 1111(b) Election

In In re Marlow Manor Downtown, LLC, No. AK-14-1122-JuKiKu (9th Cir. B.A.P. Feb. 6, 2015), the Bankruptcy Appellate Panel of the United States Court of Appeals for the Ninth Circuit (the "BAP") ruled that a chapter 11 plan of reorganization cannot classify an undersecured claim as fully secured unless the creditor itself elects to be treated as fully secured under Bankruptcy Code Section 1111(b)(2).
In Marlow Manor, the debtor proposed a chapter 11 plan treating a partially-secured lienholder, namely AHFC, as fully secured.  This allowed the debtor to classify the deficiency claim separately from general unsecured claims in order to avoid the impact of an unfavorable vote against the plan by AHFC.  The creditor moved for a determination that the classification was improper.  

The bankruptcy court granted the creditor's motion.  The debtor appealed, and the BAP affirmed.
The BAP found that the plan sought to treat AHFC’s unsecured claims as though it had made the Section 1111(b) election although it had not.  The Section 1111(b) election required the debtor to treat a partially-secured claim as fully secured and pay the full amount of the claim under a plan.

The BAP held that, under Bankruptcy Code Section 1122(a), separate classification of AHFC’s deficiency claims was improper because there was nothing to distinguish them from other general unsecured claims.  Specifically, although the existence of a guarantee may justify separate classification, in this case the guarantor was insolvent and not a source of recovery.

This opinion highlights the importance of determining the value of collateral in bankruptcy.  If the value is not estimates, and the debtor and creditor cannot agree on a value, debtors may not be able to neutralize the creditor's objections by simply paying the creditor in full.

Friday, February 6, 2015

Radio Shack Bankruptcy Update: Emergency First-Day Motions to be HeardToday

At 11:00 am today in Delaware, Radio Shack will request emergency relief pursuant to several "first-day" motions, including approval of debtor-in- possession financing and authority to use cash collateral and pay pre-petition wages.  View the hearing agenda here.  We represent California landlords in the Radio Shack bankruptcy cases. 

Thursday, February 5, 2015

Radio Shack Files for Chapter 11 Bankruptcy

RadioShack Corporation and Atlantic Retail Ventures, Inc. filed voluntary chapter 11 bankruptcy petitions today in the United States Bankruptcy Court for the District of Delaware.  Both companies declared assets and liabilities of more than $1 billion.  View the RadioShack Corporation petition here and the Atlantic Retail Ventures, Inc. petition here.

Thursday, January 29, 2015

Cramming Down Secured Debt and the Section 1111(b) Counter-Measure

On Tuesday, February 10, 2015, the Commercial Law & Bankruptcy Section of the Bar Association of San Francisco will present a lunch program entitled "Cramming Down Secured Debt and the Section 1111(b) Counter-Measure," explaining the most significant moves a debtor can make to modify mortgages and other liens and the countermoves the credit might take.  Reno Fernandez is the Section's Immediate Past Chair.


Cramming Down Secured Debt and the Section 1111(b) Counter-Measure



Speakers


Robert G. Harris

Binder & Malter

 

Michael St. James

St. James Law

 

Topics


• The Nuts and Bolts of Cramming Down a Secured Creditor

• The (Under) Secured Creditor’s Leading Counter-Measures

• Future Value, Credit Bidding, and How it all Plays Out in Practice


Time and Place


February 10, 2015
Noon to 1:30 pm


The City Club
155 Sansome Street
San Francisco, California


RSVP HERE