Creditor Groups and the Unsecured Creditors' Committee
Creditors are most powerful in a bankruptcy when they group together. For instance, in the matter of Physicians Reliance Association filed in the Middle District of Georgia, our office represented approximately 1200 doctors who were sued in that bankruptcy. As a result of the strength of the alliance, our clients were able to obtain more favorable terms than any other group in that litigation. Many of our clients settled a practically certain judgment for 10% of its value and some paid nothing at all.
We saw a similar result in the case of In re Coho Energy that was filed in the Northern District of Texas wherein our office represented approximately 600 Mississippi farmers. Except in Coho the bankruptcy estate paid us.
Groups of creditors can appear as groups of individuals or as a class, depending on the case. When they appear as a class in a Chapter 11, as in In re Coho Energy, (filed in Dallas; Mr. Chesnutt represented approximately 600 Mississippi farmers) their power lies in their number and their vote. When they appear as a group of individual defendants, as in Physicians Reliance Association, (filed in their power may lie in their threat of litigation. But wherever the power finds its common denominator, in a bankruptcy a group of creditors is always influential, because one of the primary purposes of the Bankruptcy Code is to protect the interests of most of the creditors. For instance, although, they normally have no desire to, a strong group of creditors in a Chapter 11 can take over a debtor's business.
There are other alternatives. For instance in a Chapter 7 case filed in the Eastern District of Texas, this office was contacted by a group of creditors early in the case. Utilizing the early notice and the power of the group, we took steps to elect our own trustee and ultimately recovered approximately $700,000 from a case that had been filed as a "no-asset" proceeding.
Often when a creditor receives a notice of bankruptcy, he writes off the debt and closes his file. This is not necessarily a wise move. Our office has been sufficiently successful in creditor representation that we are comfortable in offering contingent fees in many cases.
Are you a landlord with a bankrupt tenant? In a case filed in the Northern District of Texas, we represented the owners of an office building in Dallas in a Chapter 7. The building ended up with $80,000 of furniture and before the end of the case the creditors of the debtor were paying rent to our client. Your lawyer must think outside of the normal bankruptcy box.
Do you own an apartment building with a bankrupt tenant? You have more authority that you may think.
So, before you throw that notice of bankruptcy away (thinking that you understand what has just happened to you), give us a call and let us see how much actual cash we can recover for you.