Creditors' rights representation in loan workouts and in bankruptcy is a core function of Maslon's Financial Services Group. We leverage our extensive work in this area to offer clients knowledgeable and careful guidance, helping them make practical assessments of relevant economic and legal risks.
Banks, asset-based lenders, equipment financiers, and other financial service providers regularly seek our representation regarding their rights in connection with defaults by commercial borrowers and guarantors. We view workouts as the process of maximizing lender recovery while directing a borrower to refinance or repay the loan as soon as practicable. In each case, the best approach will depend on a host of factors, including the integrity and competency of management, refinancing alternatives, the determination of the value of collateral, the dependence upon insiders to obtain recoveries, and other loan structure or documentation problems.
Our lawyers work closely with our clients to review loan documentation, establish strategic objectives, and implement a workout plan. We also advise lenders about appropriate responses to borrower fraud, accusations of lender liability, environmental risks, regulatory restrictions in the borrower’s industry, competing creditor claims, and other pitfalls they may face during the workout process.
We are skilled at drafting collateral turnover agreements, forbearance agreements, deeds in lieu of foreclosure, and other documents that facilitate repayment of a loan through the liquidation of collateral or the transition of a loan to another lender. Our litigation support in this area is also extensive. We have or establish teams with significant experience in prosecuting the full range of credit collection matters, including real and personal property foreclosures, receiverships, and the defense of third-party and lender liability claims.
Maslon's experience representing banks, indenture trustees, asset-based lenders, equipment financiers, and other non-debtor constituencies in bankruptcy is significant. We work to protect the rights of creditors and other parties affected by insolvency in virtually all bankruptcy procedural settings. In large bankruptcy cases, we focus their efforts on efficient and cost-effective client recovery. In smaller cases, we often seek deadlines in favor of senior secured creditors that the debtor must meet to continue to receive bankruptcy protection.
Our capabilities cross a broad array of substantive issues, including the permissible scope of first day orders, DIP lending, use of cash collateral, automatic stay, sales of assets, assumption or rejection of executory contracts, contested plan confirmations, preferences, fraudulent conveyances, and claims objections. We also regularly participate on unsecured creditor committees in large, complex Chapter 11 bankruptcy reorganizations on behalf of indenture trustees throughout the United States.
In cases where valuations and business solutions are complex, we work closely with financial advisors. In all regards, we help clients formulate an effective bankruptcy strategy, with attention to practical assessment of relevant economic and legal risks.