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Bankruptcy Lawyer South Salt Lake Utah

Bankruptcy Lawyer South Salt Lake Utah

If you or your business is unable to pay off its debts, consult with an experienced South Salt Lake Utah bankruptcy lawyer.

When a debtor is experiencing financial difficulties, the creditors and the debtor have to decide if they can work out a private solution to their problems or seek a court-supervised outcome. One of the impediments to a private solution is information asymmetry. Creditors usually know much less about the debtor’s true financial condition and ability to pay and restructure itself than the debtor. A workout refers to a negotiated agreement between the debtors and their creditors outside the bankruptcy process. The debtor may try to extend the payment terms, which is called extension, or convince creditors to agree to accept a lesser amount than they are owed, which is called composition. A workout differs from a prepackaged bankruptcy in that in a workout the debtor either has already violated the terms of the debt agreements or is about to. In a workout, the debtor tries to convince creditors that they would be financially better off with the new terms of a workout agreement than with the terms of a formal bankruptcy.

After the filing of the bankruptcy petition and the granting of the automatic stay, only the debtor has the right to file a reorganization plan. This period, which is initially 120 days, is known as the exclusivity period. It is rare, however, particularly in larger bankruptcies, to have the plan submitted during that time frame. It is common for the debtor to ask for one or more extensions. Extensions are granted only for cause, but they are not difficult to obtain. However, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 placed an absolute limit of 18 months on the exclusivity period.

Obtaining Post-petition Credit

One of the problems a near-bankrupt company has is difficulty obtaining credit. If trade creditors are concerned that a company may become bankrupt, they may cut off all additional credit. For companies that are dependent on such credit to survive, this may mean that a bankruptcy filing is accelerated. In fact, if a company may be on the verge of bankruptcy, its vendors may decline to offer them normal credit terms and may insist on cash on delivery. For example, this was the case in 2008 for Linens & Things, which found it had to pay cash to vendors who normally offered them 30 to 60 days to pay. When this happens it elevates a company’s cash needs at a time when it is actually less liquid than normal. This can accelerate the path to a bankruptcy filing.

Sometimes the bankruptcy of one company can create liquidity problems for other companies. For example, when Montgomery Ward filed for bankruptcy in 1997, suppliers became concerned about other companies and preemptively cut off shipments and required cash payments.

To assist bankrupt companies in acquiring essential credit, the code has given postpetition creditors an elevated priority in the bankruptcy process. This type of lending is referred to as debtor-in-possession, or DIP, financing. DIP lenders have an elevated priority over prepetition claims. It is ironic that creditors may be unwilling to extend credit unless the debtor files for bankruptcy so that the creditor can obtain the elevated priority.

A company that seeks such postbankruptcy financing has to file a motion with the bankruptcy court seeking permission to do so. It is not unusual to see companies file such motions at the time they do their Chapter 11 filing or shortly thereafter. Section 364 of the Bankruptcy Code provides that such loans have super-seniority status and have a priority over other secured creditors. Thus, while creditors might not want to lend to the company on an unsecured basis, the fact that the debtor-in-possession may possess significant assets with a high collateral value, combined with the super seniority status, may give them confidence that their loans will be repaid. Various financial institutions specialize in DIP financing.

Credit Conditions and Length of Time in Bankruptcy

The management of cash-strapped companies that have significant assets that can be used as collateral may find the reorganization process comfortable and not have incentive to move the process along. Prepetition creditors, however, would have a different view as they see the claims fall in value as new creditors’ interests are placed ahead of theirs. In weak credit markets that process may work very differently. For example, in the wake of the subprime crisis, credit availability declined sharply. This created more liquidity issues for bankrupt companies—even those that had significant assets that normally could be used as collateral. This, in turn, caused bankruptcy stays to become shorter and for the increased use of prepackaged bankruptcies.

Reorganization Plan

The reorganization plan, which is part of a larger document called the disclosure statement, looks like a prospectus. For larger bankruptcies, it is a long document that contains the plans for the turnaround of the company. The plan is submitted to all the creditors and equityholders’ committees. The plan is approved when each class of creditor and equity holder approves it. Approval is granted if one-half in number and two-thirds in dollar amount of a given class approve the plan. Once the plan is approved, the dissenters are bound by the details of the plan.

Sometimes, to avoid slowdowns that may be caused by lawsuits filed by dissatisfied junior creditors, senior creditors may provide a monetary allocation to junior creditors. This is sometimes referred to as gifting.
A confirmation hearing follows the attainment of the approval of the plan. The hearing is not intended to be a pro forma proceeding, even if the vote is unanimous. The presiding judge must make a determination that the plan meets the standards set forth by the Bankruptcy Code. After the plan is confirmed, the debtor is discharged of all prepetition claims and other claims up to the date of the confirmation hearing. This does not mean that the reorganized company is a debt-free entity. It simply means that it has new obligations that are different from the prior obligations. Ideally, the postconfirmation capital structure is one that will allow the company to remain sufficiently liquid to meet its new obligations and generate a profit.

Cramdown

The plan may be made binding on all classes of security holders, even if they all do not approve it. This is known as a cramdown. The judge may conduct a cramdown if at least one class of creditors approves the plan and the “crammed down” class is not being treated unfairly. In this context, unfairly means that no class with inferior claims in the bankruptcy hierarchy is receiving compensation without the higher-up class being paid 100% of its claims. This order of claims is known as the absolute priority rule, which states that claims must be settled in full before any junior claims can receive any compensation.

The concept of a cramdown comes from the concern by lawmakers that a small group of creditors could block the approval of a plan to the detriment of the majority of the creditors.14 By giving the court the ability to cram down a plan, the law reduces the potential for a holdout problem.

Fairness and Feasibility of the Plan

The reorganization plan must be both fair and feasible. Fairness refers to the satisfaction of claims in order of priority, as discussed in the previous section. Feasibility refers to the probability that the postconfirmation company has a reasonable chance of survival. The plan must provide for certain essential features, such as adequate working capital and a reasonable capital structure that does not contain too much debt. Projected revenues must be sufficient to adequately cover the fixed charges associated with the postconfirmation liabilities and other operating expenses.

Partial Satisfaction of Prepetition Claims

The plan will provide a new capital structure that, it is hoped, will be one that the company can adequately service. This will typically feature payment of less than the full amount that was due the claimholders.

BENEFITS OF THE CHAPTER 11 PROCESS FOR A DEBTOR

The U.S. Bankruptcy Code provides great benefits to debtors, some of which are listed in Table 12.6. The debtor is left in charge of the business and allowed to operate relatively free of close control. This has led some to be critical of what they perceive as a process that overly favors the debtor at the expense of the creditors’ interests. The law, however, seeks to rehabilitate the debtor so that it may become a viable business and a productive member of the business community.

Company Size and Chapter 11 Benefits

The fact that debtors enjoy unique benefits while operating under the protection of the bankruptcy process is clear. Smaller companies, however, may not enjoy the same benefits that the process bestows on larger counterparts.

PREPACKAGED BANKRUPTCY

A new type of bankruptcy emerged in the late 1980s. In a prepackaged bankruptcy, the firm negotiates the reorganization plan with its creditors before an actual Chapter 11 filing. Ideally, the debtor would like to have solicited and received an understanding with the creditors that the plan would be approved after the filing. In a prepackaged bankruptcy, the parties try to have the terms of the reorganization plan approved in advance. This is different from the typical Chapter 11 reorganization process, which may feature a time-consuming and expensive plan development and approval process in which the terms and conditions of the plan are agreed to only after a painstaking negotiation process.

Benefits of Prepackaged Bankruptcy

The completion of the bankruptcy process is usually dramatically shorter in a prepackaged bankruptcy than in the typical Chapter 11 process. Both time and financial resources are saved. This is of great benefit to the distressed debtor, who would prefer to conserve financial resources and spend as little time as possible in the suspended Chapter 11 state. In addition, a prepackaged bankruptcy reduces the holdout problem associated with voluntary nonbankruptcy agreements. In such agreements, the debtor often needs to receive the approval of all the creditors. This is difficult when there are many creditors, particularly many small creditors. One of the ways a voluntary agreement is accomplished is to pay all the small creditors 100% of what they are owed and pay the main creditors, who hold the bulk of the debt, an agreed-upon lower amount.
It was noted previously that approval of a Chapter 11 reorganization plan requires creditors’ approval equal to one-half in number and two-thirds in dollar amount. With the imminent threat of a Chapter 11 filing, creditors know that after the filing is made, these voting percentages, as opposed to unanimity, will apply. Therefore, if the threat of a Chapter 11 filing is real, the postbankruptcy voting threshold will become the operative one during the prepackaged negotiation process.

Prevoted versus Postvoted Prepacks

The voting approval for the prepackaged bankruptcy may take place before or after the plan is filed. In a “prevoted prepack” the results of the voting process are filed with the bankruptcy petition and reorganization plan. In a “postvoted prepack” the voting process is overseen by the bankruptcy court after the Chapter 11 filing.

Tax Advantages of Prepackaged Bankruptcy

A prepackaged bankruptcy may also provide tax benefits because net operating losses are treated differently in a workout than in a bankruptcy. For example, if a company enters into a voluntary negotiated agreement with debtholders whereby debtholders exchange their debt for equity and the original equityholders now own less than 50% of the company, the company may lose its right to claim net operating losses in its tax filings. The forfeiture of these tax-loss carryforwards may have adverse future cash flow consequences. In bankruptcy, however, if the court rules that the firm was insolvent, as defined by a negative net asset value, the right to claim loss carryforwards may be preserved.

Corporate bankruptcy is a complex process. If you are a business owner considering bankruptcy, speak to an experienced South Salt Lake Utah bankruptcy lawyer. The bankruptcy lawyer will review you case and advise you on what you need to do. There is a lot at stake in a corporate bankruptcy. Don’t take chances. Hire an experienced South Salt Lake Utah bankruptcy lawyer.

If you are a creditor and your debtor has filed a Chapter 11 bankruptcy, don’t contact the debtor directly or try to collect the debt. You will be violating the automatic stay. Instead seek an appointment with an experienced South Salt Lake Utah bankruptcy lawyer. Discuss your debt with a bankruptcy lawyer and no one else. The lawyer will advise you on what you need to do next.

South Salt Lake Utah Bankruptcy Lawyer Free Consultation

If you have a bankruptcy question, or need to file a bankruptcy case, call Ascent Law now at (801) 676-5506 for your Free Consultation. We want to help you.

Michael R. Anderson, JD

Ascent Law LLC
8833 S. Redwood Road, Suite C
West Jordan, Utah
84088 United States

Telephone: (801) 676-5506

Ascent Law LLC

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South Salt Lake, Utah

 

From Wikipedia, the free encyclopedia
 
 
South Salt Lake, Utah
City of South Salt Lake
South Salt Lake City Hall, South Salt Lake, Utah

South Salt Lake City Hall, South Salt Lake, Utah
Motto: 

City on the Move
Location in Salt Lake County and the state of Utah.

Location in Salt Lake County and the state of Utah.
Coordinates: 40°42′28″N 111°53′21″WCoordinates40°42′28″N 111°53′21″W
Country United States
State Utah
County Salt Lake
Settled 1847
Incorporated 1938
Named for Great Salt Lake
Area

 • Total 6.94 sq mi (17.98 km2)
 • Land 6.94 sq mi (17.98 km2)
 • Water 0.00 sq mi (0.00 km2)
Elevation

 
4,255 ft (1,297 m)
Population

 (2010)
 • Total 23,617
 • Estimate 

(2019)[2]
25,582
 • Density 3,685.11/sq mi (1,422.76/km2)
Time zone UTC−7 (Mountain (MST))
 • Summer (DST) UTC−6 (MDT)
ZIP codes
84106, 84115, 84119
Area code(s) 385, 801
FIPS code 49-71070[3]
GNIS feature ID 1432753[4]
Website https://sslc.gov/

South Salt Lake is a city in Salt Lake CountyUtah, United States and is part of the Salt Lake City Metropolitan Statistical Area. The population was 23,617 at the 2010 census.

South Salt Lake, Utah

About South Salt Lake, Utah

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Reviews for Ascent Law LLC South Salt Lake, Utah

Ascent Law LLC Reviews

John Logan

starstarstarstarstar (5)

We've gotten divorce and child custody work from Ascent Law since the beginning because of my ex. We love this divorce firm! Staff is gentle, friendly and skilled. Tanya knows her stuff. Nicole is good and Ryan is fun. Really, all the staff here are careful, kind and flexible. They always answer all my questions, explain what they're doing and provide great legal services. I personally think they are the best for divorce in Utah.

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Jacqueline Hunting

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I have had an excellent experience with Ascent Law, Michael Reed is an absolutely incredible attorney. He is 100% honest and straight forward through the entire legal process of things, he also has a wonderful approach to helping better understand certain agreements, rights, and legal standing of matters, to where it was easy to know whats going on the entire process. I appreciate the competency, genuine effort put forth, and assistance I received from Ascent and attorney Michael Reed, and I will be calling these guys if ever I have the need again for their legal assistance! 5star review Wonderful attorneys!

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Anthony Ziegler

starstarstarstarstar (5)

This review is well deserved for Ryan and Josh. New clients should know they are worth the 5 star rating we give them. We needed 2 sessions from them because of the complexity of the matter, but they are both very passionate about his helping others in need.  My sister needed bankruptcy and I needed divorce.  Sometimes they go hand in hand but a large shout out to this team - also Nicole is one of the sweetest people you ever did meet - she offered me warm cookies!

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Thomas Parkin

starstarstarstarstar (5)

Mike Anderson and his colleagues & staff are knowledgeable, attentive and caring. In a difficult and complex case that eventually went to trial, Mike was the voice of reason and the confidence I needed. His courtroom abilities are amazing and I felt his defense of me was incredible. His quick thinking and expertise allowed for a positive result when I felt the World was crumbling. His compassion, after the case, has helped me return to a good life. I trust Mike and his staff. They are friendly and very good at what they do.

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Yeran Merry

starstarstarstarstar (5)

I worked with Attorney Alex and Paralegal Ami in my divorce case. I got to know the team very well over the course of two years. I cannot think of a better team to have worked with. Ami and Alex are not only exceptional law professions who are very knowledgeable and thorough, they are also the best human beings who empathize with the emotions I was experiencing. Alex was conscious of my budget and worked efficiently to try to reduce unnecessary legal expenses. My case also involved some dealings with a foreign country that Alex and his team had previously dealt with.  They did an amazing job addressing cultural barriers in a very respectful manner and did not fall short in quality of work or in standards when dealing with some of these new challenges. Ami deserves a medal for being extremely professional, calming, and compassionate when it is needed most.  When you need family law attorneys, call this firm. I now feel I can move forward with grace and dignity.

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About the Author

People who want a lot of Bull go to a Butcher. People who want results navigating a complex legal field go to a Lawyer that they can trust. That’s where I come in. I am Michael Anderson, an Attorney in the Salt Lake area focusing on the needs of the Average Joe wanting a better life for him and his family. I’m the Lawyer you can trust. I grew up in Utah and love it here. I am a Father to three, a Husband to one, and an Entrepreneur. I understand the feelings of joy each of those roles bring, and I understand the feeling of disappointment, fear, and regret when things go wrong. I attended the University of Utah where I received a B.A. degree in 2010 and a J.D. in 2014. I have focused my practice in Wills, Trusts, Real Estate, and Business Law. I love the thrill of helping clients secure their future, leaving a real legacy to their children. Unfortunately when problems arise with families. I also practice Family Law, with a focus on keeping relationships between the soon to be Ex’s civil for the benefit of their children and allowing both to walk away quickly with their heads held high. Before you worry too much about losing everything that you have worked for, before you permit yourself to be bullied by your soon to be ex, before you shed one more tear in silence, call me. I’m the Lawyer you can trust.