Insolvency Litigation

While normal business disputes are difficult enough, insolvent companies bring an entirely different set of problems and legal principles that require very specific expertise to navigate. The laws surrounding bankruptcy and insolvency are often unfamiliar and counterintuitive for the parties and their counsel. The ability to recover in these situations requires an attorney who can help the client and their counsel navigate this difficult terrain.

In this arena, fast action matters. When a bankruptcy case is filed, very specific deadlines arise- some as short as 60 days – that can bar a creditor from recovery on their debt. Timely action in the same case can allow an affected party – whether a trade partner, bank, or others – to preserve their rights, and frequently to recover in full.

Insolvency litigation also involves so-called “clawback actions” – where a bankruptcy trustee, Chapter 11 debtor, or receiver sues to unwind payments to a defendant who has merely accepted payment for goods and services, or even bought assets from the insolvent company. These can arise in many circumstances – regulatory investigations by the SEC or state authorities, efforts to unwind Ponzi schemes, and in bankruptcy cases. Voidable transfer litigation can also be a useful tool for a creditor seeking to recover from a defendant that claims to be insolvent, but has divested itself of assets to avoid collection.

The attorneys at Franklin Soto Leeds LLP have represented business owners, creditors, court-appointed fiduciaries, debtors, and other stakeholders – both as plaintiffs and defendants – in exactly this type of litigation. We frequently team with a client’s existing counsel to develop a cost-effective litigation strategy that maximizes the chances for success and recovery.