Tag Archives: chapter 11

Small Business Reorganization Act Will Bring Changes to Preference Litigation

The Small Business Reorganization Act of 2019 (the “Act”) will go into effect on February 19, 2020. Most of the attention given to the new law deservedly addresses the impact of those provisions that are intended to streamline the bankruptcy process for “small business debtors” that might not otherwise have the financial resources to reorganize under Chapter 11. Recognizing that a Chapter 11 proceeding has become very expensive, lawmakers have offered small business owners (generally persons or entities engaged in commercial activities and having aggregate debts not exceeding $2,725,625) an opportunity to reorganize under a new Subchapter V of Chapter 11. These provisions reduce the likelihood that an unsecured creditors’ committee will be appointed, lighten reporting requirements, and provide for guidance of a “small business trustee,” among other things. Although critically important, these changes will not have any effect on middle-market and large corporate bankruptcies. Much less attention has been paid to a provision in the Act that is applicable in bankruptcy cases of all sizes and could prove to be of material benefit to a debtor’s vendors. Continue reading Small Business Reorganization Act Will Bring Changes to Preference Litigation

Next Wave of Oil and Gas Bankruptcies

A new wave of bankruptcy filings for leveraged oil and gas companies has begun and this time it may involve more prepacks and less optimism. Beginning in late 2015 and continuing through 2017, downtown Houston was filled with bankruptcy lawyers. Highly leveraged exploration and production (or E&P) companies had become crippled by falling oil prices and the resulting impact on the value of their producing and non-producing reserves in their borrowing bases. No one was immune from the effect: servicing companies, suppliers and vendors, mid-stream and up-stream alike, all operating in a changed market. Many of these borrowers, however, anticipated a near term upswing in the price of oil and commenced their chapter 11 cases with that in mind. For a period of time, they were right. In 2018, WTI Crude recovered above $60 per barrel and reached the mid-$70s as many oil and gas companies exited bankruptcy with improved balance sheets. The volume of oil and gas company bankruptcies declined dramatically from 2016 to 2018. But it didn’t last. Continue reading Next Wave of Oil and Gas Bankruptcies