Disputes between businesses and creditors often happen when companies file for bankruptcy. If your business is a party in one of these disputes, whether it involves your company or another company’s bankruptcy filing, you should strongly consider hiring a Louisiana business bankruptcy lawyer.
The experienced attorneys at Simien & Simien have represented businesses in a variety of these kinds of disputes. We are well-versed in bankruptcy laws and know how to apply that understanding to the specifics of your case. We are committed to working tirelessly toward a favorable outcome for your business, whether you are a creditor or debtor.
We offer a free, no obligation legal consultation where you can discuss the specifics of your claim and find out how our experienced business litigation attorneys can help.
Types of Business Bankruptcy Disputes We Handle
Our Louisiana business bankruptcy lawyers can represent clients in many types of disputes that come up during the bankruptcy process, including but not limited to:
Preferential Payments and Transfers
Our firm defends creditors against bankruptcy courts that invoke section 547 of the U.S. Code (U.S.C.), also called the preferential payment rule.
Under this rule, if a debtor makes a payment to a creditor and files bankruptcy within 90 days of making the payment, the bankruptcy court can file a lawsuit to force the creditor to return any payments made during those 90 days to the bankruptcy estate. Once the funds are returned to the bankruptcy estate, they can be distributed to general creditors.
If you are an insider with the debtor, the period under which the rule applies increases from 90 days to one year. The bankruptcy court will define a creditor as an insider if the debtor paid all or a portion of the debt to that creditor but did not make payments to other creditors.
According to 11 U.S.C §101(31), an insider is also defined as a:
- Relative of the debtor
- General partner of the debtor
- Corporation in which the debtor is a director, officer or person in control
Simien & Simien's Louisiana business bankruptcy attorneys may be able to reach a compromise with the bankruptcy trustee for a discounted settlement so you do not have to return all of the money you received from the debtor.
Your situation may also fall under one of the three exceptions to the preferential payment rule:
- Payments were part of a contemporaneous exchange for new value given – New value is defined as money, goods, services or new credit. It also includes property released by a transferee that was previously transferred to the transferee in a transaction that cannot be voided by the debtor or trustee under any applicable law. New value does not include one obligation substituted for an existing obligation.
- Payments in the ordinary course of business – This includes situations where a payment was made within a time period specified on an invoice.
- The transfer creates a security interest – This applies if the transfer creates a security interest in property that was acquired by the debtor. The property must be securing a new value given after signing a security agreement that describes the property as collateral. The security agreement must be given by or on behalf of the secured party to allow the debtor to acquire the property.
Tolling Agreements and Settlements
Another way creditors can shield themselves from lawsuits over preferential payments and transfers is to enter into a tolling agreement with the trustee.
In a Chapter 13 bankruptcy, a tolling agreement suspends any statute of limitations that applies to a preferential payment lawsuit until the Chapter 13 plan is paid in full. In most cases, these agreements will also state that the creditor cannot use the statute of limitations as a defense if a lawsuit is eventually filed.
The statute of limitations is a deadline for filing a lawsuit. Once the deadline passes, the claimant can no longer file a claim. In most cases, the statute of limitations for preferential payment claims is two years from the date the bankruptcy case commenced.
Under the tolling agreement, as long as the debtor pays the Chapter 13 plan in full, the trustee will no longer have a basis for claim. This means that the creditor would get to keep the money it received from the debtor.
However, if the debtor does not pay the plan and fails to convert the case into a Chapter 7 bankruptcy, the trustee will still have time to file a preferential payment lawsuit.
Our Louisiana business bankruptcy lawyers can review your situation to determine if a tolling agreement makes sense.
An adversary proceeding is a lawsuit filed separate from but related to a bankruptcy case. This type of claim could be filed by a creditor, debtor or bankruptcy trustee.
Adversary proceedings are filed when certain types of disputes cannot be handled within the bankruptcy case. This can include:
- The trustee can file a claim to regain property that the debtor transferred or sold to someone prior to the bankruptcy filing.
- Debtors can file claims to eliminate junior liens on real estate, which is the only way to get rid of these liens in many districts.
- The trustee could file a claim alleging that a debtor filled out schedules on bankruptcy forms incorrectly with the intent to commit fraud.
- Debtors can file claims to recover damages for actions taken by a creditor in violation of U.S. bankruptcy laws, such as violating an automatic stay on collections or a discharge of a debt.
- The trustee could file a claim to force a debtor to switch from a Chapter 7 filing to Chapter 13.
- Issues in litigation which have been stayed in State or Federal Court due to the bankruptcy may be litigated between the parties in interest in an adversary proceeding depending upon the nature of the issues and their relationship to the bankruptcy estate.
The Louisiana business bankruptcy lawyers at our firm represent clients who file these claims and clients who are battling these claims.
Objection to Discharge of a Debt
One type of adversary proceeding is filing an objection to the discharge of debt in a Chapter 7 bankruptcy filing.
A discharge of debt releases the debtor from any legal obligation to pay for a certain debt. A discharge is a permanent order that prohibits a creditor from taking any action to collect any debts that have been discharged.
Once a discharge case has been filed, the creditor will be alerted, at which time he or she can object to the discharge by filing a complaint, or adversary proceeding, with the court.
There are two types of objections and they must be filed within 60 days of the meeting of creditors:
Objection to the discharge of one debt – This can be filed by a creditor. If the objection is successful, the debt will not be discharged and the debtor will be required to repay all of it.
Objection to the discharge of all debts – This can be filed by a creditor or the bankruptcy trustee. These claims are usually filed only when accompanied by an allegation of fraud against the debtor in connection with the bankruptcy filing.
Some examples of bankruptcy fraud include:
- Providing false information on the bankruptcy petition or schedules
- Transferring property to another person to avoid including it in the bankruptcy
- Lying to the trustee or judges during your bankruptcy filing
If the debtor is convicted of these or any other types of fraud, he or she will be sentenced to prison and the discharge of all debts will be denied.
A creditor can also file this type of motion in a Chapter 13 case if the debtor:
- Failed to keep or produce adequate financial records
- Hid assets
- Destroyed assets
- Failed to obey a lawful order from a bankruptcy court
There are a variety of circumstances under which an objection to a discharge is likely to be successful:
- The debtor intentionally filed a tax return with false information
- The debtor obtained a loan by intentionally listing false information on a financial statement or loan application
- The debtor received a Chapter 7 discharge at some point in the past eight years
- The debtor is attempting to discharge a debt for property damage caused by the debtor.
- The debt consists of credit card charges of more than $675 that were made within 90 days of filing for bankruptcy.
Simien & Simien's Louisiana bankruptcy lawyers can help you file an objection to a discharge of a debt and build a strong case for why the debtor should still be responsible for the debt. We can also help you if you are on the other side of this dispute and are trying to prove why a debt should be discharged.
Motions for Abandonment of Property
One way to keep a piece of property in a Chapter 7 bankruptcy is to file a motion to compel an abandonment of property with the bankruptcy court. The motion directs the trustee to abandon the property, leaving it in your possession.
However, you will have to prove that the property has no value to the bankruptcy estate and that giving the trustee more time to sell it would be detrimental to you.
Our Louisiana business bankruptcy lawyers can help you file a motion to compel an abandonment to help you keep a piece of property you do not want sold. We also represent creditors who oppose a motion to compel an abandonment.
Objections to Confirmation of Plans
In a Chapter 11 or 13 bankruptcy filing, the filer creates a debt repayment plan that must be approved by the bankruptcy court. The plan is reviewed at the confirmation hearing and interested parties can object to the terms.
The Louisiana business bankruptcy lawyers at Simien & Simien can help you object to a repayment plan at a confirmation hearing. We will do what is in your best interest concerning the collection of the debt you are owed. While it may not be possible to collect all of the debt, we are committed to helping you collect as much of it as possible.
Lifting Stay Orders
When a business or individual files for bankruptcy, the bankruptcy court institutes an automatic stay on most collection efforts during the course of the bankruptcy case.
However, creditors can file motions to lift the automatic stay so they can continue their efforts to collect on debts. If a creditor can convince the court that there is a good reason why the stay should be lifted, the court will do so and collection efforts may continue.
Secured creditors often file motions to lift the automatic stay if:
- The debtor is not making payments.
- The creditor is concerned that there is no insurance on the collateral for the debt.
- The creditor thinks it is unlikely that the debtor will make payments in the future.
Courts will usually lift the stay if the debtor is behind on payments and is unable to get payments back on schedule.
Unsecured creditors can also file motions to lift the automatic stay and are usually successful if the debt they are owed is excluded from the bankruptcy discharge. Examples of debts excluded from a bankruptcy discharge often include child support, spousal support and criminal restitution.
Our Louisiana business bankruptcy lawyers know how to build a strong case for why the stay should be lifted.
Generally, unless the debtor exempts a piece of property from a Chapter 7 bankruptcy filing, the property, or the ownership interest in it, will be transferred to the trustee, who may sell it to pay off the creditors or the trustee may abandon the property.
When a creditor does not want to recover the property in question, and when the debtor is interested in retaining it, the debtor and creditor can enter into reaffirmation agreements in which the debtor reaffirms the debt and agrees to pay it off. This is completely voluntary and the debtor is under no obligation to sign on to a reaffirmation agreement. The court and trustee will generally review the agreement to verify that it is in the best interest of the bankruptcy estate.
Simien & Simien's Louisiana business bankruptcy lawyers can advise you if it is a good idea to do this. Usually it is only a good idea in certain situations:
- The item on which you owe the debt is one that you really need.
- You cannot replace the property on which you owe the debt for less money.
- You can afford to pay back the debt.
- You can afford to catch up on missed payments.
Meetings of Creditors and 2004 Examinations
If you have a stake in a bankruptcy, whether you are a creditor or debtor, you will have to attend a meeting of creditors.
The meeting lasts just a few minutes and is a chance for creditors or the trustee assigned to the case to question the debtor under oath.
If you seek representation from our Louisiana business bankruptcy lawyers, we can represent you at the hearing, also called a 341 meeting. We will attempt to gather important information that will help us advocate for your best interests throughout the bankruptcy case.
However, these meetings are so short that it can be tough to gather a lot of information. That is why we might request a 2004 examination.
A 2004 examination is somewhat similar to the meeting of creditors, except creditors, debtors or their attorneys can question witnesses other than the debtor under oath and demand documents that may be relevant to the case.
Some of the reasons you might want to request a 2004 examination include:
- Locating property
- Determining whether a debtor or creditor lied on any bankruptcy documents
- Examining financial transactions
- Determining if the debtor should be allowed to discharge one or more debts
Our Louisiana business bankruptcy lawyers can file a motion for a 2004 examination and conduct the hearing for you. We are committed to collecting all of the evidence we need to advocate for your best interests in the bankruptcy case, whether you are a debtor or creditor.
Drafting and Filing a Proof of Claim
If a business that owes you an unsecured debt files for bankruptcy, you will likely need to file a proof of claim to increase your chance of receiving compensation from the bankruptcy estate.
The skilled Louisiana business bankruptcy lawyers at our firm can ensure your proof of claim includes all of the necessary information and is filed within 90 days of the first meeting of creditors.
A proof of claim must include:
- The debtor
- Bankruptcy case number
- Name and mailing address of the creditor
- The basis of the claim
- The amount owed as of the filing of the proof of claim
- The type of claim, whether it is secured or unsecured
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Contact our Louisiana Business Bankruptcy Lawyers Today
Simien & Simien's Louisiana business bankruptcy attorneys are well-versed in the bankruptcy process. We know how to assist debtors and creditors with a variety of disputes that can arise during the process. We are committed to aggressively pursuing a favorable resolution of your dispute.
Simien & Simien's Baton Rouge office is located just 15 minutes from the U.S. Bankruptcy Court for the Middle District of Louisiana, where we could file your bankruptcy.
We offer a free, no obligation consultation to find out how our attorneys can help you.
Call our Louisiana business bankruptcy lawyers at (800) 374-8422.