Blocking A Bankruptcy Filing Still A Remote Possibility

Law360, New York (May 6, 2016, 11:56 AM EDT) -- Darren Azman

Michael Galen Try as they might, lenders can never completely strip borrowers of their right to file for bankruptcy. Of the many steps lenders take to mitigate the risk of a borrower's bankruptcy filing, one often-employed strategy is to insert a blocking director to exercise his vote in favor of the creditor. This is part of the approach used to create bankruptcy remote entities in financing transactions in an effort to isolate and protect the borrower's assets that serve as collateral. But the recent decision in In re Lake Michigan Beach Pottawattamie is one example of the limits on...

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