WHITE & WOLNERMAN, PLLC NEWSLETTER

When a Credit Advance Isn’t a Loan - MCAs and the Future of Oversight

November 2021

The ongoing global pandemic has brought financial strain to businesses, especially small businesses, and their ability to secure the financing needed to continue as going concerns. Against this backdrop, the Merchant Cash Advance (“MCA”) industry, already experiencing steady growth since its inception in 2008, has substantially increased its funding to small businesses over the pandemic. READ MORE >

The Feeling Isn’t Mutual – Limitations on the Right of Setoff

October 2021

A fundamental policy underlying the Bankruptcy Code is equality of distribution among similarly situated creditors. By contrast, Section 553 of the Bankruptcy Code recognizes state law rights of creditors to offset “mutual” debts owing by and between the debtor and creditor. A creditor’s ability to offset the entire amount it owes the debtor against amounts it is owed effectively allows a higher return in bankruptcy than similarly situated creditors would be afforded without offsets. READ MORE >

A Rose by Any Other Name – When Loans are Recharacterized as Equity

September 2021

The rights and remedies of those making investments in a given company – be they debt, equity or a combination of both – are governed by the underlying documents memorializing the transaction. A recent decision from the Bankruptcy Court for the Southern District of New York, In re Live Primary, LLC, 626 B.R. 171, 178 (Bankr. S.D.N.Y. 2021), however, serves as reminder that the labels placed on a given transaction by the parties will not necessarily dictate whether the transaction is a loan or capital contribution. READ MORE >

Rejecting a Debtor’s Attempt to Reject Asset Transfer Agreements in Bankruptcy

August 2021

A company’s ability to retain favorable contracts while avoiding unprofitable ones is fundamental to a successful reorganization in Chapter 11 bankruptcy cases. Section 365 of the Bankruptcy Code authorizes a company to assume “executory contracts” and unexpired leases that, based upon its business judgment, are favorable and to reject those that are not. READ MORE >