Estate Planning: A Frequently Used, But Rarely Successful, Defense Against Fraudulent Transfer Claims

By: Donald L. Swanson “Estate planning” is a frequently utilized, but rarely successful, defense against fraudulent transfer claims. Here’s why: estate planning strategies that make perfect sense when everyone is solvent become cloaked with “badges of fraud” amid insolvency, demonstrating “actual intent to hinder, delay or defraud creditors.” Estate planning to address financial defaults is usually... Continue Reading →

How Bankruptcy Reorganization is Good for Local Communities: aka, Why S. 897 & S. 1091 Need to be Enacted at Once

By: Donald L. Swanson Business reorganization in bankruptcy gets a bad rap. Here’s why: “bankruptcy” deals with failed promises to pay (if you google synonyms for “failure,” the first word to appear is “bankruptcy") and implies a moral shortfall in the minds of many. That’s unfortunate because business reorganization can be a good thing.  When utilized... Continue Reading →

Congress Needs to Help Family Businesses in Financial Stress — Not Punish Them!

By: Donald L. Swanson We live and work in a market economy, here in these United States. The market is our economic judge: it validates—or invalidates—business decisions, and it picks winners and losers. The market is an efficient, impartial and unbiased judge. But it is also cruel and unforgiving. The result is that many businesses succeed.... Continue Reading →

The Problem of Pass-Through Tax Liability from Liquidation of a Family Business — A Chapter 11 Solution?

By: Donald L. Swanson Hypothetical: A family business has been successful for many years. But obsolescence of its products and services is taking a toll: the business is now insolvent, its assets are fully encumbered, no one is interested in buying the business as a going concern, and family shareholders have guaranteed most of its debts.... Continue Reading →

Resisting Fraudulent Transfer Temptations — Family Businesses

By: Donald L. Swanson About a decade ago, I have an appointment scheduled in my office with two brothers. I’m excited, because they are the principals of a major family business in our region. I’m aware that their business is facing economic headwinds and am assuming they want my counsel on managing their business difficulties. Our... Continue Reading →

A Strategy to Beat the Absolute Priority Rule in Family Business Bankruptcies

By: Donald L. Swanson The absolute priority rule is the greatest legal impediment to reorganizing a family business under Chapter 11—no other legal impediment is even close. In what follows, I offer a strategy for beating that rule. The Absolute Priority Rule The absolute priority rule is a Chapter 11 plan confirmation requirement. It says:... Continue Reading →

Representing Family Businesses in Financial Stress

By: Donald L. Swanson I’ve been practicing law since 1980. A major portion of my practice, throughout those decades, has been in bankruptcy and related areas of law. And I’ve represented all sides: debtors, creditors, trustees, committees, etc. During that time, I’ve counseled hundreds of family businesses and their owners—helping each walk through a period of... Continue Reading →

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