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Critical Vendor Motions in Bankruptcy

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Motion for Debtor-In-Possession Financing

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Seeks approval for the debtor to obtain post-petition financing. New lender often obtains a senior position, which may subordinate existing vendors' claims, potentially decreasing their recovery in the overall case.

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Motion Regarding Utilities

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Debtor may file to ensure the continuation of utility services, which could include providing utilities with assurance of payment. This supports operational stability but may reduce the estate's liquidity, thereby affecting other creditors.

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Motion for the Payment of Employee Wages and Benefits

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Seeks permission to pay prepetition employee wages and benefits. This maintains workforce stability but could divert funds from other creditors, raising objections from those with competing claims.

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Motion to Assume or Reject Executory Contracts

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Debtor may seek court approval to either continue ('assume') or terminate ('reject') ongoing contracts. Assumption ensures the vendor relationship continues, rejection may leave vendors with damages claims, affecting their recovery and the bankruptcy estate.

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Motion to Authorize Payment of Prepetition Claims

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Allows the debtor to pay certain prepetition claims of critical vendors. Vendors maintain supply, preventing disruption to debtor's business, but can create a hierarchy among creditors, potentially impacting distribution.

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Motion to Settle Contested Claims

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The debtor seeks to resolve disputes over claims to streamline the case and possibly conserve resources. Settlements affecting vendors can change their expected recoveries and thus impact the bankruptcy dynamics.

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Motion to Pay Critical Vendor Claims First

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The debtor asks for court permission to prioritize payments to critical vendors over other unsecured creditors. Ensures supply chain continuity but can reduce funds available to other creditors, impacting their treatment in the bankruptcy.

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Motion to Sell Assets Free and Clear of Liens

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Allows the debtor to sell certain assets free of liens, claims, and encumbrances, which can maximize the asset value. However, it could challenge vendor liens and impact distributions from the sale proceeds.

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Motion to Reject Collective Bargaining Agreements

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Allows a debtor to reject agreements with unions to adjust labor costs, which could lead to lowered operational expenses. However, it risks labor disputes, which can adversely affect all stakeholders, including vendors, due to potential disruptions.

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Motion for Approval of Reorganization Plan

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Filed to gain court approval for the debtor's plan to restructure its obligations. The plan's provisions dictate vendor treatment and their future relationship with the reorganized entity. May impact recovery rates and the long-term viability of vendor contracts.

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