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Restructuring, Insolvency and Bankruptcy

Whether leading financially challenged businesses through Chapter 11 restructuring or fighting for the rights of creditors involved in business disputes or a debtor’s insolvency, we leverage the skill and experience of our multidisciplinary team to win maximum strategic advantage for our clients at every turn. Our Restructuring, Insolvency and Bankruptcy team offers comprehensive services for businesses of all types and sizes. The team includes attorneys with years of experience in helping financially challenged companies restructure through Chapter 11 and in handling foreclosures, out-of-court workouts, and state-law collection proceedings on behalf of creditors. We represent clients in complex bankruptcy litigation, and have broad experience in state and federal receivership proceedings—including high-profile proceedings accompanied by manifold claimants and intense public interest. As a “one-stop shop” with experience in all areas of bankruptcy law—from dealing with the minutiae of Chapter 11 of the Bankruptcy Code to working with the big-picture strategic realities of multinational banks and corporations—our Restructuring, Insolvency and Bankruptcy team is well-positioned to obtain optimum results for our clients. In addition, members of our team have been recognized by Super Lawyers, Best Lawyers and Legal Elite in bankruptcy and creditors’ rights. LeClairRyan is also listed among the 100 U.S.-based firms with the most bankruptcy partners globally by Bankruptcy Law 360.

Our Bankruptcy and Creditors’ Rights team represents the following types of clients:

  • Secured lenders
  • Debtors
  • Creditors’ committees
  • Chapter 11 trustees, examiners, and receivers
  • Chapter 7 trustees
  • Parties to avoidance actions and other bankruptcy litigation
  • Landlords
  • Vendors
  • Priority and general unsecured creditors
  • Other parties in interest
  • Purchasers of assets
  • Shareholders, partners, and employees
  • Business Debtor Representation/Financial Restructuring
    When representing business debtors facing financial challenges, the overarching goal of our Bankruptcy & Creditors’ Rights team is to maximize the strategic opportunities available under Chapter 11 of the Bankruptcy Code and alternative non-bankruptcy venues. At the same time, however, we also focus on gaining a thorough understanding of the industry-specific market realities confronted by each client. This intelligence frequently proves useful in the restructuring process itself and gives the overall effort a greater chance of success. As counsel to financially challenged businesses of all types and sizes, we are involved in every aspect of reorganization, from pre-bankruptcy planning through plan-confirmation and entry of a final decree, including analysis of:
    • Cash collateral requirements and budgeting for operations during restructuring 
    • Employee matters
    • Public relations concerns and business management objectives
    • Re-collateralization and restructuring of existing debt facilities
    • Re-financing and new investment of capital
    • Sale of business units or other assets in order to maximize and expedite recovery
    • Claims and lien reduction, subordination, or avoidance
    • Recovery of pre-petition transfers
    • Contract negotiation and rejection or assumption of executory contracts

    Our Bankruptcy & Creditors’ Rights team focuses on practical and innovative solutions that promote the long-term success of our clients—solutions that are both affordable and efficient. Indeed, we analyze each case from multiple perspectives in order to develop strategies that mitigate damages and support continued operation during reorganization. And while we seek to avoid litigation, our litigators aggressively pursue favorable rulings for our clients whenever going to court becomes a necessity. Given our substantial trial experience before state, bankruptcy, and federal appellant courts, we are well aware of the complex issues that often arise during reorganizations. When such challenges do occur, we draw from our firm’s other practice areas such as real estate, litigation, employee benefits, tax, and employment, in order to build the best possible team for the client. This aggregation of knowledge and experience gives us greater agility and enables us to find creative, proactive solutions that save clients both time and money. With a history of success, our Bankruptcy & Creditors’ Rights team gives company leaders guidance and confidence as they persevere to forge a better future.

    Representative work:
    • Allied Nevada Gold Corp.: served as counsel to official equity security holders’ committee in mega-case pending in Delaware
    • Heilig-Meyers Company: an 830-store chain of home furnishings stores which had been the largest specialty retailer in the United States; successfully emerged as the “RoomStore” chain
    • National Pool & Spa Institute: reorganization proceedings involving the restructuring of a trade association faced with large tort claims
    • Virginia Pacific Corporation: restructuring of debt obligations for timber, logging, and hardwood chip-manufacturing operations
    • Fas Mart Convenience Stores, Inc.: proceedings to reorganize a $400 million, 180-store chain of convenience stores in five mid-Atlantic states
    • Edward J. Noble Hospital of Gouverneur, New York, Inc. and Gouverneur Nursing Home, Inc.: assisting rural hospital and nursing home in restructuring, sale and dissolution under New York Not-For-Profit Corporation Law
    • Carthage Area Hospital, Inc.: advising rural hospital in restructuring and affiliation transactions
    • Garrett Hotel Group: advised holding company of ultra-high end hotel properties in its dissolution and wind-down 
    • Barquet Group, Inc.: advised internationally renown art gallery of Latin American art in defending collection action by Chapter 11 debtor and in its Chapter 11 case
    • Union for Traditional Judaism: assisted two non-for-profit religious organizations in monetizing their assets through Chapter 11 case
    • Atlas Partners II: Chicago-based investment fund that required liquidation of assets and institution of complex accounting and recovery claims relating to private equity investments made in and around Virginia
    • Tultex Corporation: filing of a $550 million, publicly owned manufacturer of fleece and jersey products
    • Haleos, Inc.: asset sale to facilitate transfer of sophisticated fiber optics business with considerable intellectual property assets
    • Ceyoniq, Inc.: sale of software technology
    • R.J. Reynolds- Patrick County Community Hospital: representation of community hospital in sale of substantially all assets while ensuring continuation of patient care and compliance with applicable regulations governing medical services provider
    • Jefferson Mills, Inc. (II): going-concern sale of one of nation’s largest textile producers
    • Miller & Rhoads, Inc.: large, regional retailer
    • The Mayflower Inn & Spa: A Relais & Châteaux member located in Washington, CT.
    • Medical Specialists of Virginia, Inc.: professional services firm
    • eMarketworld, Inc.: trade show sponsor 
    • Adamson Company/Old Dominion Iron & Steel, Inc.: metal fabricator 
    • Kevin Mitchell: professional baseball player
    • Extraction Technologies of Virginia: recycling business
    • Edward Bannan, d.b.a. The Kenmore Inn: historic restaurant and inn
    • Kurt Wassenaar: complex personal affairs and significant equity security holder of medical technology company
    • Washington Group, Inc.: special litigation counsel to debtor in connection with litigation by subcontractors of electricity general facility
    • Jacom Computer Services, Inc.: special litigation counsel to debtor handling various breach of contract litigation and UCC matters
    • Unicapital Corp.: special litigation counsel to debtor handling litigation with former officer and director
    • Anesthesia Solutions, Inc.: special litigation counsel handling various breach of contract matters
    • Forty-Three Apparel Group: special litigation counsel handling post-confirmation litigation matters
    • Spurgeon Mercantile Company: special counsel to debtor handling post-confirmation liquidation matters
    • Scarborough-St James Corp.: debtors’ counsel handling reorganization of real estate management and holding companies
    • Circle Trust Stable Value Plus Fund: debtor’s counsel for insolvent stable value fund
    • Nekema, Inc.: debtor’s counsel for liquidation of software company
    • CSP Limoges: special litigation counsel for French professional basketball team handling litigation matters in United States
    • World Exchange Communication Inc.: special litigation counsel handling defense of New York litigation matters
  • Creditor Representation
    Our Bankruptcy & Creditors’ Rights team is skilled at enforcing and preserving our clients’ rights as creditors in bankruptcy proceedings and in commercial disputes. We represent a diverse clientele, whether as secured or unsecured creditors, including:
    • Banks and other financial institutions 
    • Equipment lessors
    • Landlords
    • Investment, venture capital, and private equity funds
    • Official and ad hoc creditors’ committees
    • Utility providers
    • Vendors

    Our goal is to obtain the best business result for our clients as quickly and efficiently as possible. To achieve this, we provide practical solutions to protect our clients’ financial interests by drawing upon our deep understanding of bankruptcy principles and law, our strong litigation and transaction experience, and our business acumen. Our lawyers have represented creditors in bankruptcy cases to resolve, either consensually or through litigation, issues related to:
    • Use of cash collateral 
    • Plan confirmation
    • Executory contracts and unexpired leases
    • Obtaining relief from the automatic stay
    • Defense of actions for violation of the automatic stay or discharge injunction
    • Defense of fraudulent conveyance and preference actions
    • Proof-of-claim litigation
    • Lien priority disputes
    • Sales of debtor’s assets

    Secured Creditors 
    Our team frequently works with commercial lenders and financial institutions in bankruptcy cases to protect their interests as secured creditors once a debtor has filed for bankruptcy protection. In connection with this representation, we work with debtor’s counsel to negotiate cash collateral stipulations and adequate protection payments, and to resolve plan-confirmation objections. We recognize that when representing secured creditors in bankruptcy, often a sale of the debtor’s assets is the most efficient way to maximize the recovery to the creditor. In these instances, our lawyers work with debtors to negotiate a sale of the debtor’s business to yield proceeds for distribution to creditors. Representation of secured creditors in bankruptcy often requires negotiation with the debtor, but litigation can be necessary to protect the secured creditor’s lien position. As experienced litigators with in-depth knowledge of the Bankruptcy Code, we frequently litigate bankruptcy matters, including motions for relief from stay to recover collateral, lien priority disputes, and claim objections.

    Moreover, our size and geographical diversity allows our attorneys to represent creditors in complex regional and national cases. Examples include:
    • Senior secured lender in Tana Seybert, LLC
    • Senior secured lender in JGB Industries, Inc.
    • Bank group participant in Best Products Company, Inc.
    • Senior secured creditor in Frank Ix & Sons, Inc.
    • Senior secured lender in both the Downtown Richmond Marriott and the Linden Row Inn hotel bankruptcy cases
    • Technology vendor in FAO Schwarz case
    • Travel insurance provider in the Premier Cruise Lines, Renaissance Cruise Lines, and American Classics cases
    • Vendor and service provider in US Airways (I and II), Delta Airlines, Northwest Airlines, and Midway Airlines
    • Vendor and service provider in connection with foreign proceedings, including Varig (a Brazilian air carrier) and Allegro Airlines (a Mexican air carrier) 

    Unsecured Creditors 
    In addition to our work with unsecured creditors’ committees, our Bankruptcy & Creditors’ Rights team frequently represents individual creditors that are either wholly or partially unsecured. Examples include: landlords and service providers in connection with unexpired leases and executory contracts; vendors in litigation brought by the debtor for turnover of allegedly preferential transfers or for Section 503(b)(9) claims; and transferees in connection with alleged fraudulent conveyances and in instances where individual creditors are accused of violating the automatic stay or discharge injunction. Where appropriate, we work in concert with other LeClairRyan practice areas, including securities, real estate, corporate, tax, intellectual property, litigation, environment and labor and employment. This collaborative approach enhances our ability to provide effective representation while reducing costs and preserving value to our clients. Our range of skill and experience spans various industries, including:
    • Financial institutions and private lenders
    • Airlines and travel industry vendors
    • Furniture manufacturers and retailers
    • Equipment manufacturers and retailers
    • Securities and hedge funds
    • Real estate developers, builders and financiers
    • Energy, including coal producers
    • Utility providers, technology and telecommunications companies
    • National and regional retailers
    • Healthcare providers 

    Out-of-Court Workouts & Creditors' Rights 
    Our Bankruptcy & Creditors' Rights team has broad experience serving clients whose insolvency issues are capable of being resolved outside of the bankruptcy context. Our non-bankruptcy creditors’ rights services include out-of-court workouts/forbearance arrangements and foreclosures, and we also are adept at providing services related to the enforcement of creditors’ rights pursuant to state law. Commercial lenders and financial institutions frequently turn to us for assistance in workout negotiations with financially troubled entities in an effort to avoid bankruptcy. Our services in this area include:
    • Analysis of credit facilities, loan and security agreements and related documents 
    • Negotiation of realistic and agreeable terms with debtors, landlords, other secured parties and parties in interest
    • Assignments for the benefit of creditors
    • Drafting of forbearance and other debt-restructuring agreements 

    Our attorneys use a multidisciplinary approach to handling foreclosure issues for our clients across our national footprint. Non-performing debt problems usually require a varied and integrated plan that incorporates sophisticated business skills, as well as intimate knowledge of the enterprise experiencing difficulty. Therefore, our team’s experience in a broad range of industries and across many jurisdictions is of tremendous value when seeking to manage the risks associated with working with financially troubled businesses and individuals. It is essential that we understand the operations of our clients’ businesses; it is also critical to understand the challenges faced by their borrowers. With this complete point of view, we strive to achieve outcomes that protect creditors’ rights, while creating opportunity for businesses and individuals to successfully resolve their financial difficulties.

    Quick intervention is of utmost concern in foreclosure cases: a settlement at hand is often more desirable than mere promise of full payment in the future. Our lawyers use their knowledge of the nuances of the Bankruptcy Code and keen understanding of subsequent rulings to resolve debt-collection matters judiciously and expeditiously. We listen carefully to the needs of our clients and chart a cost-effective course of action consistent with the constraints of the borrower’s distressed financial position. We can also offer sound counsel on strategies to help manage potential risk situations before they become unbearable in the future.

    Examples of our work include:
    • Foreclosures, deeds in lieu of foreclosure, and recovery of rents and other income 
    • Recovery, repossession, and liquidation of security interests in personal property through public or private sale
    • Actions against borrowers and guarantors and enforcement of judgments

    State Law Collection Proceedings
    Attorneys from our Bankruptcy & Creditors’ Rights team are well-versed in state law collection of defaulted debt obligations, beginning with the initial demand letter and continuing to judgment and enforcement. Unlike in the bankruptcy context, where all creditors are treated equally, state court proceedings are often “races” to find, collect, and liquidate the debtor’s assets.

    Our state law collection services include:
    • Asset investigation
    • Application for receivership or dissolution under state law
    • Filing of complaints, confessions of judgment, and creditor’s bills
    • Seeking pretrial attachment and seizure
    • Conducting debtor interrogatory hearings
    • Executing garnishments and levies
  • Bankruptcy Litigation
    Successful bankruptcy litigation requires a team with encyclopedic knowledge of the Bankruptcy Code, but it also takes “street smarts” acquired both through arguing cases in the courtroom and by working closely with a wide spectrum of clients. This is precisely what our Bankruptcy & Creditors’ Rights team brings to the table. Indeed, our veteran litigators have highly developed litigation and trial skills and years of experience in mastering the all-important strategic subtleties of bankruptcy practice. Our team is one of the largest of its kind in Virginia and the mid-Atlantic region, and is growing rapidly in the Northeast. We are capable of handling all litigation issues normally arising in the context of financially insolvent businesses.

    Our experience includes litigation of the following representative list of subjects:
    • Contested plan confirmation (“cram down”) 
    • Officer and director liability
    • Fiduciary duty claims
    • Alter ego/piercing corporate veil
    • Successor liability
    • Professional malpractice (legal, accounting, consulting, etc.)
    • Shareholder/partner disputes
    • Fraudulent conveyances
    • Preferential transfers
    • Lien determination/avoidance
    • Discharge and dischargeability claims
    • Lender liability
    • Business ownership and/or control
    • Disputed asset sales
    • Claims resolution/equitable subordination/ re-characterization of claims
    • Removal and abstention

    Our team has represented a broad array of clients which gives us a thorough understanding of the issues and needs of the entire range of participants in an insolvency situation. This client base has included debtors, including both publicly owned and closely held businesses; creditors, both secured and unsecured, in and out of bankruptcy; trustees in Chapter 7 and Chapter 11 bankruptcy cases; committees of creditors and of shareholders, officers, and directors of debtor corporations; partners of debtors and guarantors of the obligations of debtors; shareholders, parent companies, and other owners of debtors; non-bankrupt subsidiaries of debtors; purchasers of assets of bankrupt companies in contested bidding; and creditors receiving allegedly avoidable transfers

    Representative cases:

    A sample of cases in which our trial attorneys have represented clients in bankruptcy or insolvency situations includes:

    Corporate takeover: A national franchisor was involved a Chapter 11 bankruptcy case. Our team represented the founder of the franchisor in an attempt to take control of the company. After preliminary hearings in federal district courts in the District of Columbia and Virginia and a trial in the Delaware Chancery Court, the Delaware Chancery Court rendered a verdict in favor of the founder. The franchisor exited bankruptcy and was later sold to a nationally known retailer.

    Breach of fiduciary duty: Our client, a leasing corporation, acquired a debtor and created an LLC subsidiary to run its business, putting the corporation’s executive vice president in charge of the LLC as its “managing member” without documentation of the fiduciary role of the executive vice president. After a year of running the LLC, the executive vice president decided that he owned the LLC and put it into bankruptcy to stave off attempts by the client corporation to re-secure its ownership position. After a 10-day trial, the bankruptcy court rendered a verdict in favor of our client, and an appeal of that verdict was dismissed by the federal district court. The client subsequently sold the assets of the LLC, and a plan of reorganization was approved to cancel any claims of the executive vice president to ownership and to distribute the net proceeds to our client.

    Creditor reorganization of debtors: Our Bankruptcy & Creditors’ Rights team represented secured creditors in the bankruptcies of scores of limited partnerships. This resulted in the successful reorganization and liquidation of nearly 10,000 individually mortgaged properties with $1.4 billion in first-mortgage debt. More than 6,000 limited partners were syndicated in the reorganization, which included the negotiation of $350 million in mortgage insurance participation, negotiation of Federal Home Loan Bank Board rulings to prevent write-down of mortgages to preserve solvency of the savings and loan industry, and establishment of re-sale brokerage and mortgage-lending companies to liquidate the properties.

    Disputed intellectual property: Advised a technology company that enhanced the safety and quality of egg production and marketability of its rights in Chapter 11 proceeding of one of its transaction partners and protected those rights through purchase of disputed intellectual property in 363 sale.

    Partner of a debtor: Partners face unique difficulties when their co-partner becomes a debtor in bankruptcy. Our team represented the partner of a bankrupt co-owner of numerous automobile dealerships, both in bankruptcy and in suits against after-market insurance companies and against the foreign manufacturer, U.S. importer, and regional distributor of automobiles for violations of state “dealer day in court” laws. This resulted in a series of verdicts and settlements that precluded liability for the client and, in the follow-on cases, made the client whole for his partners’ defalcations.

    Shareholder of a publicly traded corporation: A major shareholder of a publicly traded corporation was faced with the loss of all of the value of his stock when the corporation went into bankruptcy and sought to reorganize by canceling its existing stock in favor of creditors. After a lengthy contested valuation proceeding, our team was able to negotiate a substantial stock position for the client in the reorganized debtor.

    Defense of financial institution: A prominent financial institution was sued for beach of the peace in connection with its attempts to liquidate its security interest in the borrower’s inventory. Despite the fact that the institution clearly violated applicable law, we tried the case to a defense verdict by demonstrating to the court that the defendants suffered no economic damages.

    Avoidance litigation: Obtained dismissal with prejudice of $10.5 million preference lawsuit against physical precious metal merchant within three months of commencement. In a separate matter, advised world class metal forming manufacturer on defending and settling multimillion-dollar preference lawsuit.

    Customer of bankrupt wastewater treatment plant: A wastewater treatment facility in a Chapter 11 case had violated multiple environmental laws and regulations. One of its customers, a multinational corporation, turned to our team when it was sued by the plant, purportedly for causing the aforementioned violations. Our team played a prominent role in the negotiations of a settlement wherein the facility was sold to a third party and the lawsuit against the client was dismissed with no payment by our client.
  • Receiverships
    In both state and federal court receivership proceedings, we take maximum advantage of our extensive experience with business insolvency and creditors’ rights issues. Indeed, we are deeply familiar with the complexities of insolvency law and possess the business acumen and legal experience necessary to meet the differing needs of diverse businesses involved in receivership proceedings. Our Bankruptcy & Creditors’ Rights team also represents creditors that seek to put a company into receivership.

    The representation of receivers is unique in the area of complex receivership matters, which may include dissolving and liquidating complex businesses, both regulated and non-regulated, such as hospitals, insurance companies, banking institutions, stock brokerage and investment companies. Some of these business organizations are regulated and insured by governmental agencies. The receiverships, therefore, are accompanied by considerable public interest and numerous claimants. An example of a complex receivership is an action filed by the Commodity Futures Trading Commission (CFTC). The CFTC has asked LeClairRyan to serve as federal equity receiver in cases involving registered futures commission merchants which solicit and accept customer funds in the foreign exchange market. When futures commission merchants fall below the net capital requirements established by the National Futures Association, the CFTC files an action against the futures commission merchants and places all of the company’s assets in receivership. As receiver, LeClairRyan seeks cost-efficient avenues to determine the extent of the customer account balances and other liabilities of the company, recover assets for the receivership (including asset-recovery from third parties) and complete a claims process for customers and creditors.

    One attorney on our team has served as the receiver of an insolvent construction company in the Circuit Court for the City of Winchester, Va., involving a myriad of complex claims. Another has served as CFTC federal court receiver in Nations Investments, LLC and in Forefronts Investments Corp., insolvent futures commission merchants involved in foreign currency exchange.

    Other receivership representations include:
    • Circle Trust Company – State banking authority receivership
    • Duke & Co., Inc. – Liquidation under Securities Investor Protection Act
    • Northshore Asset Management, LLC – SEC receivership
    • Gregory Gibbs d/b/a Golden Summit Group – SEC federal court receiver responsible for recovery of assets and payment to investors in Ponzi scheme
  • Bankruptcy Trustee Appointments & Representation
    Our attorneys have significant experience serving as general and special counsel to bankruptcy trustees, assisting them with all aspects of administering the bankruptcy estate, including concealed asset location and recovery, investigations of suspected fraud, asset liquidation, reorganization planning, negotiations with creditors' committees, settlement of preference claims, and avoidance actions.

    Representative matters:
    • Served as Chapter 11 trustee, operating 23 Dunkin' Donuts stores and bakery in New York metropolitan area while conducting six asset sales generating $21 million over three years, and prosecuting avoidance, insider and purchaser litigation leading to 33 settlements; successfully prosecuted and collected $9 million judgment against proposed buyer; proposed and confirmed liquidating plan with 80+ percent payout to unsecured creditors
    • Served as Chapter 11 trustee, managing, rehabilitating and marketing three rent-stabilized apartment buildings in Brooklyn, New York, which led to private sale netting aggregate price 20 percent in excess of appraised values and 100 percent payout to unsecured creditors under confirmed liquidating plan
    • Served as elected Chapter 7 trustee for not-for-profit research facility in New York and handled monetization of real and intellectual property assets and prosecution and settlement of estate claims against former officers and directors
    • Served as Chapter 11 trustee of gourmet supermarket located in downtown New York City, operating store through going concern sale and confirming liquidating plan within one year of appointment
    • Advised the elected Chapter 7 trustee of public New York incorporated Israeli investment company in stabilizing and monetizing its direct and indirect equity holdings in over 80 private corporations primarily based in Israel, including negotiating sinking fund and preference settlement and litigation financing with bondholders
    • Served as liquidation trustee to nation’s second largest title insurance company, achieving nearly 80 percent distribution to unsecured creditors through asset recovery and liquidation and claims adjudication
    • Served as trustee in an assignment for the benefit of creditors in Edwards Grain & Fertilizer, Inc.


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