Chapter 11 Helps Small Businesses Restructure

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In the field of bankruptcy law, there are typically a number of bankruptcy options available to debtors at any given time. Small businesses often must choose between Chapter 7, Chapter 13, and Chapter 11 bankruptcy, each of which has its own benefits and drawbacks. Chapter 13 bankruptcy requires small businesses owned by a partnership, corporation, or limited liability company to sell available assets, while Chapter 7 bankruptcy pertains only to businesses owned by individuals. Thus, for certain types of small businesses, Chapter 11 bankruptcy is the only option that allows them to continue operating. 

A business can restructure its finances and implement a reorganization plan, contingent on the approval of a bankruptcy court. Chapter 11 plans can help small businesses to balance their income and expenses, primarily by modifying payment terms and reducing obligations. In some cases, Chapter 11 debtors may pay off outstanding claims or downsize the business. As a result, the business can continue to operate and attempt to regain profitability.

Open A Door Supports Women’s Education in Afghanistan

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An international nonprofit dedicated to developing female leadership in countries recovering from armed conflict, Open A Door aims to connect women with college education programs and mentorship opportunities. For nearly 15 years, the organization has worked to empower women in Afghanistan and help them become leaders in their communities. With the support of the U.S. government, as well as the international community, Open A Door has made significant progress in areas such as education, safety, participation, and political empowerment.

Today, for the first time in the history of Afghanistan, women can hold positions of power in various social, economic, and political organizations. In addition to helping women obtain postsecondary degrees in the United States, Open A Door equips them with the confidence and communication skills necessary to challenge authority and bring about meaningful change. Through a program titled Supporting Her Education Changes a Nation (SHE-CAN), the organization plans to unite more than 50 colleges and universities across the globe in support of women’s education and empowerment in Afghanistan. 

To learn more about Open A Door, visit the official website at www.openadoorfoundation.org.

UCC Foreclosure Sales - Benefits and Due Diligence

For parties seeking to purchase distressed assets, a Uniform Commercial Code (UCC) foreclosure sale may offer an attractive alternative to the traditional court-administered bankruptcy sale process. When a borrowing company defaults on its debt, Article 9 of the UCC allows lenders to sell the firm’s collateral “at any time and place and on any terms,” requiring only that the transaction be “commercially reasonable.” A UCC foreclosure, which allows for a much quicker sale, generally takes only 30 to 90 days and requires less financial expense.

UCC foreclosure sales do not facilitate the transfer of physical property, instead serving as a means to carry out a “friendly foreclosure” in which the borrowing company transfers its business to the buyer in a private sale. It can be a useful option for a midsize business whose going-concern value is less than its debt, but more than the value of its hard assets.

This type of foreclosure sale allows a buyer to obtain assets free of all liens and with limited risk of fraudulent conveyance. However, it does not provide representations or warranties for the purchased assets. For this reason, buyers must carry out due diligence for the purchased assets and make certain that both parties follow the proper sales process. This includes giving notice of the sale to all junior lienholders and ensuring that all aspects of the sale are “commercially reasonable,” including the time, place, terms, and method of the transaction. These considerations are especially crucial if a buyer intends to operate the business following the sale, as this introduces potential complications such as real estate arrangements and issues of trade and successor liability.

Asking the Right Questions - An Important Skill Set for Attorneys

In 2010, Diversity Journal named attorney Suzzanne Uhland to its list of "Women Worth Watching." A partner in the firm of O’Melveny & Myers, LLP, serving in its San Francisco and Newport Beach, California, offices, Ms. Uhland possesses two decades of experience in corporate financial law matters such as insolvency, restructuring, and Chapter 11 bankruptcy. Her legal abilities have won praise from The Best Lawyers in America, Chambers and Partners USA, and other professional publications.

Among the most valuable skills any attorney can develop is the ability to ask pertinent questions of clients. In order to provide the best possible representation, an attorney needs to build a thorough understanding of a client’s business operations, ongoing concerns, and individual objectives. In a 2013 interview with the publication Law360, Ms. Uhland noted that she advised new colleagues to be sure to ask the right questions.

Experienced attorneys in all fields point to a few essential questions to ask. These include questions involving the client’s preferred methods of communication, the client’s greatest fears about the matter at hand, and why the client chose to approach a particular attorney. Attorneys should also find out about a corporate client’s management, production, and tax challenges. And, echoing Suzzanne Uhland’s advice to Law360, experts consistently urge attorneys to discuss exactly what each client hopes to accomplish, and how the attorney and client will know that they have attained that goal.

Oil Market Trends Impact Exploration and Production Companies

Suzzanne Uhland leverages extensive experience in Chapter 11 reorganizations and bankruptcy to serve as a partner at the San Francisco offices of O’Melveny & Myers, LLP. As the chair of the firm’s U.S. restructuring practice, Suzzanne Uhland closely follows market trends that impact the financial stability of companies and industries.

In 2015, the trend of declining oil prices has started to significantly influence the financial stability of exploration and production (E&P) companies. The U.S. Energy Information Administration forecasts that oil prices will continue to decline throughout the year and the recent value of options contracts and futures indicates a high level of market uncertainty for crude oil. For E&P companies, the reduced oil prices have severely impacted cash flows and caused many enterprises to become over leveraged.

WBH Energy, an E&P company based in Texas, was the of its kind to file for chapter 11 in early 2015, and industry experts predict that a number of E&P companies and associated service providers will follow suit during the year. The current market conditions for E&P companies mean than some enterprises many need to contemplate restructuring alternatives and investors may act to protect or establish their interests in the industry.

An Overview of the Different Types of Bankruptcy Filings

Suzzanne Uhland presently works at O’Melveny & Myers LLP as a partner. During her time in this position, Suzzanne Uhland has demonstrated extensive knowledge of the bankruptcy process.

In some situations, declaring bankruptcy is a business’ only option. In such cases, business owners must educate themselves in the four different types of bankruptcies that can be declared.

By filing for Chapter 7 bankruptcy, businesses are entering into a process more commonly known as liquidation. During liquidation, trustees sell assets to offset outstanding debts, while debts that cannot be satisfied are discharged. Chapter 7 is an attractive option for businesses with few major assets and no future plans to continue operations.

Sole proprietorships, corporations, and partnerships that do plan on recovering in the future will prefer a Chapter 11 filing, which revolves around a reorganization plan that will be closely monitored by a court-appointed trustee.

Chapter 13 bankruptcy can also be filed by sole proprietors, though it is more commonly filed by consumers, and it involves the debtor outlining a plan for repayment. When compared to Chapter 7 bankruptcy, a Chapter 13 filing can benefit a sole proprietor by protecting personal assets, such as a house, that are involved with the business.

Finally, Chapter 12 bankruptcy is a filing reserved for family farmers and fishermen who can pay back debts over a period of three to five years.

Mentoring - A Key to Success for Young Lawyers

A graduate of Yale Law School, Suzzanne Uhland serves as a partner at O’Melveny & Myers and chairs the firm’s restructuring practice. Selected as one of 2009’s Women Worth Watching, Suzzanne Uhland knows the challenges facing young lawyers and stresses the importance of mentoring to overcoming obstacles and achieving success.

Most young lawyers, when they take their first jobs after law school, quickly learn that their professional development cannot take place in a vacuum. For example, there is a widely held misconception that professionalism equates to toughness, and that the true professional remains aloof from even her peers. Young lawyers, just starting out in professional careers for which they have been exhaustively trained at great expense, usually do not have the capacity to evaluate their own performance except in the most general way. For example, a young attorney who loses an argument in a meeting often cannot appreciate that her debating skills were superior, but that she was simply on the wrong side of the argument.

The term “mentoring” has become almost overused in the past couple of decades, yet it describes perfectly the relationship young lawyers just entering the field should try to establish with an older, more experienced professional. Many law firms and other enterprises have more formal mentoring programs, in which established members of the firm are matched with the new entrants. Mentors can help their charges to recognize and cultivate their strong points and coach them to overcome their weaknesses. They can also be invaluable in helping young professionals to develop the people skills so important to success.