Practices:

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• Litigation
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• Tax

Bankruptcy, Creditors' Rights and Insolvency-Related Litigation

Complex bankruptcy cases call for attorneys who are at once litigators and negotiators, advocates who are fluent in law, business and finance. Time and again, the attorneys at McKenna Long & Aldridge (MLA) prove themselves on all counts. In major bankruptcies and restructurings throughout the U.S., MLA attorneys help troubled companies reorganize, creditors to recover what is due them, trustees to manage major cases, and businesses to acquire distressed assets. Whether negotiating a sophisticated reorganization plan or litigating a complex adversary proceeding, our attorneys bring experience and creativity to the task.

Commercial bankruptcy cases involve multiple stakeholders and an array of competing interests. Through years of concentration in this field, we have the knowledge to represent all major stakeholders. Our clients are trustees, examiners, debtors, creditors and creditors' committees. In addition, we represent court-appointed fiduciaries in enforcement actions brought by federal regulatory agencies. We also represent secured and unsecured creditors both in and out of bankruptcy court.

Our experience covers all major industries. Our record of successful cases spans real estate, health care, manufacturing, technology, securities, construction, retail and textiles. The attorneys within our practice are fellows of the American College of Bankruptcy, hold leadership positions in bankruptcy and insolvency organizations, regularly speak and write about bankruptcy issues and are well regarded among their colleagues.

Debtors

Our experience representing debtors includes the successful reorganizations of a health care provider with over $100 million in assets and liabilities and of a utility cooperative with more than $1 billion in secured debt and $150 million in unsecured debt. In our handling of the liquidation of a sportswear manufacturer with annual sales of $50 million, we achieved 100 percent confirmation of the plan by creditors.

Creditors' Committees

The creditors' committee is central to the outcome of a Chapter 11 case. Our record includes serving as lead counsel for the unsecured creditors' committee in a case involving a $100 million hedge fund and in another involving a publicly traded technology company facing secured and unsecured claims in excess of $100 million. In the bankruptcy of a major mortgage company that specialized in subprime home equity loans, we were lead counsel for the committee of equity security holders.

In representing the creditors' committee in the case of a leading modem manufacturer, we helped achieve a plan that paid unsecured creditors in full with interest. We achieved the same result for unsecured creditors in the liquidation of a publicly traded tour business.

Trustees, Examiners and Receivers

Our attorneys have experience representing court-appointed fiduciaries in multiple cases. Our work includes representing the examiner in the $2 billion failed IPO of a commodities broker. We represented the Chapter 11 and 7 trustee for international sporting goods companies with $100 million in secured and unsecured creditor claims.

We have represented receivers in cases involving a CFTC investigation of a hedge fund with $20 million in investor claims, an FTC investigation of a fraudulent debt counseling company with $172 million in consumer claims, and an SEC investigation of a fraudulent investment scheme involving liquidation of $23 million in receivership assets.

Creditors and Interested Parties

Our attorneys regularly represent individual creditors and other parties in interest in litigation and bankruptcy proceedings. In one case, we represented secured creditors holding $88 million of debt in the confirmation of a plan resulting in the sale of a chain of more than 250 regional convenience stores. In another, we represented an investment fund in the confirmation and $100 million purchase of a national chain of retail jewelry stores.

For a secured creditor holding $31 million of debt, we fought for its interests through highly contentious bankruptcy and adversary proceedings. We were successful in obtaining the appointment of a Chapter 11 trustee and in obtaining sanctions against the principal for its dilution of the creditors' collateral. Sanctions included daily fines and the principal's imprisonment.

Representative Engagements

Trustee, Examiner and Receiver Representations

The representation of court-appointed fiduciaries requires lawyers and law firms with experience and resources in all areas of commercial law, bankruptcy and litigation.  Our Group has both the skill and the resources to represent court-appointed fiduciaries in all manner of complex cases.  Members of the Group have represented court-appointed fiduciaries in the following matters:

• Representing Examiner in Chapter 11 bankruptcy of a seller of tenancy-in-common ("TIC") real estate investments (In Re: DBSI Inc., et al., United States Bankruptcy Court, District of Delaware). Updates regarding this representation can be found here. 

• Representing Examiner in $2 billion failed IPO of commodities broker (In Re: Refco et al., United States Bankruptcy Court, Southern District of New York).
• Representing Chapter 11 and 7 Trustee for international sports turf and sporting goods companies in which secured and unsecured creditor claims are approximately $100 Million.  (In Re: Southwest Recreational Industries, Inc. et al, United States Bankruptcy Court for the Northern District of Georgia)
• Representing Receiver appointed on the Motion CFTC to administer and investigate the affairs of a hedge fund involving $20 Million in investor claims. (CFTC v. Lake Dow, United States District Court for the Northern District of Georgia).
• Representing Receiver appointed in FTC action against a fraudulent debt counseling company involving $172 million in consumer claims. Receiver was appointed to investigate, locate and liquidate assets of the company’s principal and his related entities, with recoveries of over $20 million to date. (FTC v. AmeriDebt, Inc., et al., United States Court for the Court for the District of Maryland).
• Representing Receiver appointed in SEC action against fraudulent investment scheme and in related state criminal action. Assisted Receiver in liquidating over $23 million in diverse receivership assets, including ownership interests in fast food restaurants, a multi-million dollar hotel and conference center, residential and commercial real properties and undeveloped land, as well as investment interests in varied business enterprises. ( SEC v. D.W. Heath & Associates, Inc., et al., United States District Court for the Central District of California).
• Represented Chapter 7 Trustee in successfully obtaining injunction against future litigation from problem Debtor. (In Re: Jeffrey Bryan, United States Bankruptcy Court for Northern District of Georgia).

Committee Representations

  One of the critical players in any Chapter 11 Case are Official Committees appointed by the United States Trustee.  Members of the Group have significant and very successful experience representing Committees as evidenced by the following engagements: 

• Lead counsel for unsecured creditors’ committee of a $100 million fraudulent hedge fund.  (In Re: International Management Associates, United States Bankruptcy Court, Northern District of Georgia).
• Lead counsel for unsecured creditors’ committee of a publicly traded technology company.  Secured and unsecured claims asserted against this debtor exceeded $100 million. (In Re: Access Beyond, et al, United States Bankruptcy Court for the District of Delaware)
• Lead counsel for an Official Committee of Equity Security Holders of a Louisiana-based mortgage company which specialized in sub-prime home equity loans. Claims against the Debtor exceeded $1 billion. (In Re: United Companies Financial Corporation; United States Bankruptcy Court for the District of Delaware.)
• Represented the creditors’ committee in the Chapter 11 case of a leading manufacturer of modems and other related computer equipment wherein unsecured creditors were paid in full with interest pursuant to a confirmed plan of reorganization. (In Re: Hayes Microcomputer Products, Inc., United States Bankruptcy Court for the Northern District of Georgia.)
• Served as counsel for the unsecured creditors' committee of a publicly-traded helicopter tour business wherein unsecured creditors were also paid in full with interest on their claims pursuant to a negotiated plan of liquidation. (In Re: Papillion Helicopters, Ltd., United States Bankruptcy Court for the Northern District of Georgia.)
• Served as counsel to the creditors' committee representing claims aggregating $80 million in the Chapter 11 case of one of the country's largest catering and vending distribution companies in negotiating a consensual plan of reorganization. (In Re Service America Corp.; United States Bankruptcy Court for the District of Connecticut.)

Debtor Representations

The Representation of a Debtor in a Bankruptcy Case or in an out of court restructuring requires extensive skill and experience in all facets of bankruptcy and business law.  Members of the Group have represented Debtors in the following matters:

• Represent Reorganized Debtor in connection with successful reorganization of business entities engaged in ownership and management of nursing homes and other assisted living facilities located throughout the United States in cases involving over $100 Million in assets and liabilities.  (In Re: Centennial HealthCare Corporation; United States Bankruptcy Court for the Northern District of Georgia).
• Represented an electric utility generation and transmission cooperative in restructuring of more than $1 billion of secured debt and $150 million of unsecured debt. (In Re: Big Rivers Electric Corp., United States Bankruptcy Court for the Western District of Kentucky).
• Represented the last domestic manufacturer of cellophane in which scheduled claims exceeded $60 Million.  (In Re: Flexel. Inc., United States Bankruptcy Court for the Northern District of Georgia).
• Served as counsel for manufacturer of women's sportswear with annual sales of $50 million in which a plan of liquidation was confirmed with 100% acceptance of creditors and under which unsecured creditors received more than a 50% distribution on their claims.  In Re: Orbit Industries. Inc., United States Bankruptcy Court for the Southern District of New York).
• Represented one of the nation's largest and most prestigious horse farms in Lexington, Kentucky, whose debts exceeded $125 million and formulated approaches to maximize recoveries for creditors from asset dispositions. (In Re: Calumet Farms; United States Bankruptcy Court for the District of Kentucky).
• Represented individual debtor in a Chapter 11 Bankruptcy Case resulting in a successful reorganization involving $19.4 million secured debt and $6.3 million unsecured debt. (In Re A.E. Barnes. III,  United States Bankruptcy Court for the Middle District of Georgia).

Creditor and Interested Party Representations

The following is a list of representative engagements in which members of the Group have represented individual creditors and other parties in interest in insolvency related litigation or bankruptcy proceedings:

• Represented secured creditors holding $88 million of secured debt in confirmation of a consensual plan resulting in the sale of a 250 plus regional convenience store chain. (In Re: Convenience USA, Inc.; United Bankruptcy Court for the Middle District of North Carolina).
• Represented secured creditors holding approximately $100 million of secured debt in confirmation of a consensual plan. (In Re: Alterra Healthcare Corporation, Bankruptcy Court for the District of Delaware).
• Representing investment fund in connection with $100 Million purchase of a national chain of retail jewelry stores and confirmation of a plan of reorganization in connection with the purchase.  (In Re: Friedman’s Jewelers, Bankruptcy Court for the Southern District of Georgia). 
• Represented secured creditor holding approximately $31 million of secured debt in pursuing and protecting its interests in highly contentious bankruptcy proceedings and related adversary proceedings which included, inter alia, (i) successfully obtaining the appointment of a Chapter 11 Trustee; and (ii) in response to the principal’s dilution of the secured creditors collateral and related actions, successfully obtaining findings of contempt against the principal and the imposition of coercive contempt sanctions, including, among other things, the imposition of daily fines and the imprisonment of the principal. (In Re: Central European Industrial Development Company, LLC d/b/a CEIDCO, et al, jointly administered; United Bankruptcy Court for the Northern District of California).
• Represented utility which was a large unsecured and post-petition creditor in bankruptcy of a natural gas marketer (In Re: Peachtree Natural Gas, Bankruptcy Court for the Northern District of Georgia).
• Represented principal secured creditor serving as Trustee of approximately $70 million of securitized debt in successful reorganization of convenience store chain owning 80 convenience stores in Texas, Arkansas and Louisiana. (In Re: Food Fast, Bankruptcy Court for the Eastern District of Texas).
• Represented defendant in $5 million preference and fraudulent conveyance action in which we obtained a directed verdict in favor of defendant at trial. (In Re Southmark Corporation, Bankruptcy Court for the Northern District of Texas).
• Represented one of the largest trade creditors which was a member of the creditors' committee and the unofficial reclamation committee in the Chapter 11 case of one of the nation's largest convenience store chains. (In Re: Circle K Corp.; Bankruptcy Court for the District of Arizona)
• Served as counsel to a large unsecured creditor, which was a member of the creditors' committee and the plan negotiating committee in the Chapter 11 reorganization of a national drug store chain. (In Re Revco, D.S.; United States Bankruptcy Court for the Northern District of Ohio)
• Represented a Northeastern commercial bank in an Alabama bankruptcy of one of the region's largest shopping center developers and negotiated the restructuring of debts exceeding $80 million. (In Re James W. Wilson Jr.; United States Bankruptcy Court for the Middle District of Alabama)
• Represented secured lender holding claims aggregating approximately $40 million in negotiations and litigation regarding restructuring of seven hotels operated by debtor located in Southeast, successfully obtaining judicial approval to foreclose on the hotels. (In Re Krisch Realty Associates, L.P.;  United States Bankruptcy Court for the Western District of Virginia)