SUBCHAPTER V OF CHAPTER 11 | SUBSTITUTE COUNSEL | CRAMDOWN AND AVOIDANCE OF MERCHANT CASH ADVANCE LIENS
Substituted in as new counsel for a business debtor in a Subchapter V Chapter 11 case (Case No. 23-51174) in the U.S. Bankruptcy Court for the Northern District of California, at a time when business debtor was at risk losing possession of its estate. Debtor ultimately lost possession, leaving the case in a posture from which most reorganizations do not recover.
Yet, in Subchapter V, only a Debtor can file a plan, whether or not a Debtor is in possession of its estate.
Working closely with the Subchapter V trustee, the firm negotiated, drafted, and obtained confirmation of a Chapter 11 plan that delivered value both to the debtor and to the debtor’s creditors, salvaging a reorganization that would otherwise have ended in liquidation or dismissal. Plan confirmed January 15, 2025.
Result: Subchapter V Chapter 11 plan confirmed for the dispossessed debtor that provided for a 100% dividend without interest to general unsecured creditors holding allowed claims, while allowing Debtor to retain control and operations of Debtor’s business. Debtor also obtains disallowance and lien avoidance of merchant cash advance liens, including contested objections to claim involving a merchant cash advance creditor (“MCA”) the resulted in disallowance of the MCA claim.
U.S. Bankruptcy Court, Northern District of California, San Jose Division
