Bankruptcy & Corporate Restructuring

Bankruptcy & Corporate Restructuring Department

Following the 2006 merger of Cole Schotz with Angel & Frankel, P.C., a nationally recognized corporate reorganization and bankruptcy boutique, the firm’s Bankruptcy & Corporate Restructuring Department has become one of the New York metropolitan area’s largest and most sophisticated corporate restructuring practices, possessing the expertise to represent clients in any insolvency-related matter throughout the country. The Department represents debtors, creditors’ committees, institutional and individual creditors, secured parties, venture capitalists, equity holders, trustees, receivers, acquiring entities and other parties with substantial interests in insolvency proceedings throughout the United States.

Business Reorganization

• Advise and implement out-of court debt restructurings, including refinancing of secured debt, negotiated settlements of debt, recapitalization and negotiation of loans, leases and other fixed obligations
• Advise as to whether Chapter 11 is viable reorganization option and provide all services necessary to facilitate the confirmation of a Chapter 11 plan of reorganization
• Represent debtors, committees, secured creditors, equity holders, purchasers of assets, plan proponents , fiduciaries, trustees and stakeholders in all aspects of the Chapter 11 reorganization process
• Facilitate debtor-in-possession and permanent financing, equity participations, mergers, acquisitions and strategic alliances
• Act as litigation counsel in complex litigation (adversary proceedings) or related proceedings in United States Bankruptcy Courts and District Courts .

Business Divestiture

Assist clients in seeking the most advantageous means of disposing of business interests, whether through asset sales, stock sales or, if necessary, liquidation options in and out-of-court

Bankruptcy Litigation

Represent debtors, trustees, equity holders, secured creditors, committees, landlords, employees and individuals in complex litigation throughout the state and federal courts of the United States

Partial Listing of Chapter 11 Bankruptcy Cases

Click here for a partial list of recent Chapter 11 cases in which the firm’s bankruptcy department has been substantially involved.

Passaic Beth Israel (PBI) was a New Jersey nonprofit hospital that operated a 264-bed acute care hospital in Passaic, NJ, and PBI served the Passaic and northern New Jersey community for more than 100 years.  In 2006, PBI faced a financial crisis caused by rising costs and declining levels of public and private reimbursements, as well as changes in the healthcare system, including shorter lengths of hospital stays, competition by ambulatory surgery centers, large amounts of unreimbursed charity care, large operating losses, increased payables and defaults under its secured bond indentures. 

Faced with the prospect of having to close its doors, PBI's Board of Trustees turned to Cole Schotz to help save this venerable institution. When it became clear that an out-of-court restructuring of its debt was not feasible, Cole Schotz filed Chapter 11 bankruptcy on behalf of PBI on July 10, 2006. 

In November 2006, PBI was hours away from having to close down for lack of operating funds. Because it appeared that PBI lacked the funds to make payroll, the New Jersey Commissioner of Health placed PBI's emergency room and ordered cancellation of certain surgical procedures in anticipation of an imminent cessation of its operations.

However, through round-the-clock negotiations, Cole Schotz was able to successfully put together a package of interim financing with a consortium of PBI's bond holders, the New Jersey Health Care Facilities Financing Authority (NJHCFFA), St Mary's and concerned citizens. This financing package provided necessary funds to permit PBI to continue to operate.  Cole Schotz simultaneously orchestrated the sale and merger of PBI with neighboring St. Mary's Hospital at the PBI campus.  The sale was completed on February 28, 2007.  St. Mary's is now in the process of selling its smaller, more antiquated facility. That transaction is being financed through the first-time use of NJHCFFA Hospital Asset Transformation Bonds, which are backed by State of New Jersey credit enhancements. The Cole Schotz  team, led by Michael Sirota and Gerald Gline, represented PBI in all aspects of this unique and complex transaction, including the Bankruptcy Court proceedings and the state regulatory process involving the New Jersey Department of Health, NJHCFFA, the New Jersey Attorney General's approval under New Jersey's Community Healthcare Assets Protection Act (CHAPA) and the required approval by the New Jersey Superior Court under CHAPA. According to Mario Marghella, Chairman of PBI's Board, "In confronting the ultimate 'bet the ranch' situation and the need to select the rare combination of healthcare and insolvency expertise, PBI wisely chose Cole Schotz to quarterback the restructuring efforts. This successful transaction, which allows for continued delivery of quality healthcare for the Passaic community, would not have been possible without the skill, knowledge, energy and creativity of all of the lawyers at Cole Schotz who worked tirelessly to make it happen." Both New Jersey and New York have commissioned task forces to make recommendations for changes, including hospital consolidations, to strengthen the health care delivery system. The PBI transaction was at the forefront of these efforts, and Cole Schotz is gratified that it has helped establish the prototype for dealing with these complex problems. 

 

Cole Schotz was selected over several national law firms as counsel to the Official Committee of Unsecured Creditors in the Chapter 11 proceeding of Kara Homes, Inc., one of New Jersey's largest residential builders.  Kara Homes entered its Chapter 11 proceeding in dire financial straights, unable to continue construction on its several residential projects or to satisfy even its payroll and related obligations.  Cole Schotz was instrumental in helping obtain Bankruptcy Court approval of debtor-in-possession financing, over the objection of nearly a dozen project lenders owed more than $200 million, to keep Kara's reorganization hopes alive.  Cole Schotz continues to work closely with Kara's professionals and crisis managers to formulate strategies for Kara's financial restructuring.

 

In the Adelphia Communications Corporation Chapter 11 bankruptcy case, filed in the United States Bankruptcy Court for the Southern District of New York, Cole Schotz was retained as special bankruptcy law counsel for class action plaintiffs involved in a securities lawsuit suit relating to Adelphia. The Bankruptcy & Corporate Restructuring Department represented the class action plaintiffs in all bankruptcy law matters pending before the Bankruptcy Court and the United States District Court for the Southern District of New York.

In a case described by the bankruptcy judge presiding in the Adelphia matter as a “difficult case that has been among the most challenging – and contentious – in  bankruptcy history,” Cole Schotz was called upon to protect and advance the interests of the class action plaintiffs. Among other achievements, Cole Schotz was successful in eliminating an extension of certain third party releases that could have dramatically affected the rights and interest of the class action plaintiffs against certain of the defendants in the securities class action litigation pending in the United States District Court for the Southern District of New York.

Representation of the class action plaintiffs in the Adelphia bankruptcy case was the most recent in a series of successful representations by Cole Schotz of class action plaintiffs in bankruptcy matters. Cole Schotz attorneys are either currently representing or have previously represented class action plaintiffs in numerous other bankruptcy matters, including Calpine Corp., Drexel Burnham Lambert Group, Inc., Lone Star Industries, Inc., Refco Inc. and Suprema Specialties.

 

Cole, Schotz  acted as outside bankruptcy and insolvency counsel for Laurus Master Fund, a private investment fund managed by Laurus Capital Management, a New York-based investment adviser with approximately $1.6 billion under management. The firm assisted Laurus to achieve recoveries from equity and asset-based investments in formal bankruptcy proceedings throughout the United States, as well as the successful implementation of “out-of-court” restructurings and foreclosures. The firm's insolvency, corporate and litigation expertise was employed to maximize returns for Laurus in projects involving food, construction and telecommunications companies, and most recently, a $40.6 million bankruptcy litigation and transaction for the sale of drilling rigs.

• Norman Pernick, Who Recently Joined Cole Schotz, is Inducted as a Fellow of the American College of Bankruptcy
• Chambers USA cited Cole Schotz as one of New Jersey’s leading bankruptcy/restructuring law firms
• Leading the Way in Healthcare Bankruptcy
• Cole Schotz team keeps hospital doors open using innovative bonds

• Commercial Landlords of Bankrupt Tenants Benefit From Ninth Circuit's Recent Decision, Cole Schotz Docket
• Bankruptcy Claims Trading: Sellers Beware, Cole Schotz Docket
• Avoiding Recharacterization of Debt to Equity, Cole Schotz Docket
• Supreme Court Rules Bankruptcy Power Not Subject to Eleventh Amendment, New York Law Journal
• Bankruptcy Code Changes Affecting Compensation: Can You Keep What You Have, and Will They Pay You What They Promised?, Cole Schotz Docket