These are daunting times for all American citizens, and corporations are facing tremendous challenges as well. The shutdown of a huge segment of the economy caused by the COVID-19 pandemic has left most companies grappling with massive hits to their revenues. Businesses across a wide swath of industries and in vastly different financial conditions must make very tough decisions about how to stretch cash on hand, substantially cut costs, fire or lay off employees, refinance debt to avoid loan defaults, and potentially reorganize their businesses.
The Corporate Restructuring and Commercial Bankruptcy specialists at Gawthrop Greenwood stand ready to counsel, advise and guide the myriad of companies that will not be able to make good on their commitments in a timely manner and may need to seek to negotiate new terms with lenders, vendors, employees and other parties.
In addition to representing distressed corporations in out-of-court debt restructurings, also called “workouts,” and Chapter 11 debtors-in-possession, our experienced attorneys have represented banks, lenders, investors, lessors, leaseholders, creditors, purchasers, vendors, creditor committees, Chapter 7 trustees and preference defendants in bankruptcy courts located in Delaware, Pennsylvania, and New Jersey.
We stand ready to serve:
- Long-standing businesses ranging from huge multinational corporations to closely held family businesses, which were flush with cash before the crisis hit but must now do cash-flow projections to sustain them.
- Leaseholders and lessors facing a shortfall on commercial rental payments due to the drastic loss of business.
- Companies that depend heavily on in-person consumer spending and are especially stressed by the economic fallout from the pandemic.
Corporate Bankruptcy Services
When the overall debt structure is complex and the lenders (and vendors) start vying over who gets paid first, a debtor may choose to seek protection in Federal Bankruptcy Court, where all the corporate debts can be renegotiated under the watch and approval of a Federal Bankruptcy Judge and the United States Trustee. A Chapter 11 bankruptcy filing allows a debtor to seek new financing, sell off troublesome but profitable subsidiaries or underutilized assets, and close unprofitable stores, plants or locations. A reorganization under Chapter 11 allows a business to catch its breath and ideally provides it with a fresh start.
Out-of-Court Corporate Debt Restructurings
In a workout, businesses work directly with their current banks/lenders to resolve a distressed or defaulted loan.
The psychological interplay between company/debtor and bank/creditor in a workout of a distressed or defaulted loan involves many issues that go beyond the plain language of the loan documents and the supporting case law. There are often significantly conflicting emotional pressures inherent in a restructuring situation, which need to be recognized and diffused. However, in the “chess game” of a restructuring/workout, emotional and psychological issues may strongly influence both parties’ actions.
For more information or to schedule a consultation, please call 610-696-8225 or click here.