FBFK’s Top 3 Bankruptcy Strategies for 2021

By Rachael Smiley, Bankruptcy Attorney/Shareholder

With the pandemic driving more bankruptcy and business distress discussions than ever, it is imperative to stay ahead of the latest issues and opportunities going into 2021. As you craft your approach in the new year, consider these insights and strategies:

  • Recognize the new and novel stakeholders at the table: The continuing “retailpocolypse” has created a paradigm shift whereby landlords and lenders are increasingly becoming owners of retail businesses. How? By obtaining the retailer’s operating assets and/or real property (e.g. JC Penney) in order to hedge against their own exposure. Meanwhile, the most valuable asset of an otherwise-shuttered retail empire is often its intellectual property, which can be obtained through a bankruptcy sale and used to revive a lifeless retail brand as an online-only purveyor.
  • Fasten your seatbelts for a lengthened distress runway: With the extension of the PPP and other governmental assistance programs, the arrival of a new administration, the increased likelihood of additional stimulus, and the continued willingness of landlords and lenders (who have no other viable option) to forebear on evictions and foreclosures, you can expect bankruptcy cans to be kicked down the road for several more months – perhaps most of 2021. In other words, the expected avalanche of bankruptcy filings may be contained to a mere rockslide for the time being.  Consider using the lengthened runway as an opportunity to renegotiate loan terms or apply a new strategy to a situation that might have previously seemed to be a lost cause.
  • Make the most of the virtual environment to get an edge: Attorneys and financial advisors working in the bankruptcy and distressed spaces have become experts at virtual negotiations, mediations and court appearances by this point. Courts have upped their game and embraced the virtual environment by adopting streamlined procedures and better technology. Many of these changes are (happily) here to stay. You and your advisors can now better monitor court proceedings and participate in important meetings with the click of a mouse – no formal appearance, plane ticket or hotel stay required. So, take advantage of the opportunity to be better informed and increase your participation in matters that you may only have a small stake in – who knows what kind of interesting deal opportunities might arise?

 

Contact Rachael today at 972-378-9111 or rsmiley@fbfk.law

Rachael Smiley, Attorney/Shareholder, is the Bankruptcy Practice Lead at Dallas-based FBFK.

She is experienced in all steps of the Chapter 11 reorganization process, including asset sales, plan confirmation, and post-confirmation plan administration. She also has experience litigating a variety of disputes, including contested matters and adversary proceedings, that arise in or are related to bankruptcy cases, such as valuation disputes, claim objections and avoidance actions. Rachael was honored as a BestLawyers® “One to Watch” in 2021 for Insolvency and Reorganization Law, is a Member of Board of Trustees of the Turnaround Management Association (TMA), and is a Member of the American Bankruptcy Institute.

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