Texas Commercial Law Firm

The attorneys at Balcom Law Firm, P.C., provide litigation support and legal advice for creditors rights issues related to bankruptcy proceedings. The attorneys at Balcom Law Firm, P.C., have represented  clients in thousands of Chapter 7, 11 and 13 cases filed throughout Texas.

Our attorneys carefully review and analyze every client file to develop a litigation plan that will achieve the greatest value to the client. Oftentimes negotiation is used in the litigation process to keep legal fees to a minimum and to reduce the risk of uncertain litigation results. In addition to being experienced litigators, the attorneys with Balcom Law Firm, P.C., are skilled in utilizing negotiation techniques and strategies to maximize the benefit to the client.

Our attorneys are licensed in all United States District Bankruptcy Courts in Texas and are available to represent creditors in any business bankruptcy matter in Texas. Because of their diverse commercial and business litigation experience, the attorneys at Balcom Law Firm, P.C., are able to advise and represent creditors in most issues which tend to occur in business bankruptcies, including, but not limited to, the following matters:

• All Chapter 7 Liquidation Issues

• All Chapter 11 and Chapter 13 Reorganization Issues

• Abandonment of Property Litigation

• Automatic Stay Litigation

• Bankruptcy Appeals

• Cash Collateral and Adequate Protection Litigation and Negotation

• Cramdown or Lien-Stripping Litigation

• Defense of Claim Objections and Preference Litigation

• Fraudulent Transfers Litigation

• Involuntary bankruptcy proceedings

• Motions for Relief from Stay Litigation

• Lien Property Disputes

• Lease and executory contract issues

• Objection to Discharge and Dischargeability Litigation

• Objection to Confirmation Litigation

• Preferential Transfers Litigation

• Receivership Issues

• Removal Process of State Court Litigation

• Representation at Section 341 Meetings of Creditors and Rule 2004 Exams

• Debt restructuring and workout negotiations

• Turnover Actions

• Valuation Proceedings
   

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Commonly used Bankruptcy Terms

Automatic Stay. The automatic stay is a component of bankruptcy law that becomes effective immediately upon the filing of a bankruptcy petition under any chapter of the Bankruptcy Code. It acts as an injunction and orders creditors to stop most collection actions against a debtor. The automatic stay may be modified or lifted under many situations to allow the creditor to pursue collections of a debt or retrieval of collateral.
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Chapter 7. Chapter 7 bankruptcy of the Bankruptcy Code, which may be voluntary or involuntary, forces a debtor to liquidate assets in an orderly way under the administration of a chapter 7 trustee. In a Chapter 7 bankruptcy proceeding, a trustee is appointed soon after the bankruptcy case is commenced to administer the bankruptcy estate. The bankruptcy estate consists of everything the debtor owns or to which the debtor has a claim. The Chapter 7 trustee seizes all nonexempt assets of the debtor, sells those assets, and distributes the proceeds to creditors. A chapter 7 trustee owes a fiduciary duty to the bankruptcy estate ONLY; he or she does not represent the interest of the debtor nor any specific creditor. Creditors are normally advised to contact their own bankruptcy counsel regarding their rights and responsibilities under the Bankruptcy Code.

Individuals, partnerships, and corporations may file for Chapter 7 bankruptcy. Businesses usually file under Chapter 7 after they realize that they can no longer operate profitably and there is no chance of reorganizing. If the debtor is an individual, he or she may be entitled to a discharge of some or all of his or her debts. A business debtor that files a Chapter 7 bankruptcy is not entitled to receive a discharge of debts nor is it allowed to exempt any assets from seizure by the Chapter 7 trustee, unless that business debtor is a self-employed individual or a sole-proprietor.
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Chapter 11. A Chapter 11 bankruptcy, which may be voluntary or involuntary, permits the debtor (usually a business) to restructure or reorganize its debt. A trustee is not normally appointed in a Chapter 11 case, as the debtor is referred to as a debtor-in-possession and allowed to continue to manage its business. The debtor has a certain amount of time to submit a plan explaining how it will repay its debts. Sometimes the debtor's plan involves liquidating assets. Normally, however, a debtor plans to reorganize its debts so that it can continue to operate during and after completion of its Chapter 11 bankruptcy proceeding.

Individuals, partnerships, limited liability companies, and corporations may file under Chapter 11. Businesses usually file under Chapter 11 when they are facing a cash flow shortage or temporary downturn in business; sometimes such downturn is due to mismanagement and a poor business model.

Upon confirmation (court and creditor approval of its plan of reorganization), a Chapter 11 debtor receives a discharge of any debt that arose before confirmation. Therefore, it is important for all impaired creditors to properly analyze and vote for or against the plan depending on how the debtor's proposed plan treats them BEFORE the plan is approved by the court. Almost all objections or motions related to plan treatment or lien issues should be filed prior to confirmation of the debtor's Chapter 11 Plan. Statutory and court-imposed deadlines must be stringently missed; the importance of understanding these deadlines is critical to any and all claims a creditor may have.
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Chapter 13. A Chapter 13 bankruptcy is used by individuals and sole-proprietors to restructure or reorganize debt. A corporation, partnership, or a limited liability company may not file a chapter 13 bankruptcy. As with a Chapter 11 bankruptcy, the debtor proposes a plan that outlines how his or her debts will be repaid. However, unlike with a Chapter 11 bankruptcy, a trustee is appointed in a chapter 13 bankruptcy case.

In a Chapter 13 bankruptcy, the debtor must devote all of his or her disposable income to payments under the plan for three to five years. A debtor under Chapter 13, must remain current with his or her obligations under both the proposed and confirmed plan, including remaining current on monthly chapter 13 payments to the chapter 13 trustee, remaining current on all payments owed after the date the debtor commenced the chapter 13 bankruptcy that are not being treated through the plan (including, but not limited to, future mortgage payments, future car payments, insurance on collateral, etc.). Again, like with a Chapter 7 case, a Chapter 13 trustee does not owe any fiduciary duty to any specific creditor, only to the bankruptcy estate. A creditor in a chapter 13 case must continuously monitor the debtor's case to determine how to utilize any means available under the Bankruptcy Code to best protect that creditor's rights. It is normally advised that creditors consult with bankruptcy counsel to determine how best to protect their rights under the Bankruptcy Code.

In Chapter 13 cases, a debtor receives a discharge of debt when that debtor has completed all obligations under the court-approved plan. Creditors may not commence an involuntary proceeding under Chapter 13, only under chapters 7 and 11 of the Bankruptcy Code.
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Discharge. A discharge in bankruptcy generally means that a creditor's claims against an individual debtor are eliminated upon completion of the debtor's obligations under the Bankruptcy Code. Upon entry of an Order of Discharge by the bankruptcy court, the creditor is permanently enjoined from ever collecting or attempting to collect on those debts owed by the debtor as of the debtor's commencement of bankruptcy under one of the chapters of bankruptcy. After discharge is granted, debtor is no longer personally liable for that discharged debt.

A creditor must timely object to the discharge of a debtor if the creditor has a belief and supporting evidence that the debtor committed a fraud on the court, including fraudulently incurring debt and hiding or concealing of assets. Unless the creditor acts to protect its interest, the debtor may be granted a discharge. If a creditor prevails and the debtor is denied a discharge, the debtor will receive the benefit of the bankruptcy. The creditor will then be able to continue to collect the debt, and the debtor will remain  liable for such debt, regardless of the fact that the debtor filed for bankruptcy protection.
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Exemptions. Individual debtors are entitled to keep certain assets, regardless of any claims of creditors, under federal or state exemption laws. Exemptions commonly-used by debtors are the homestead exemption; vehicle exemption (equity in vehicle); retirement plans, cash value of insurance policies; household goods and furnishings; clothing; and, wages. There are monetary limits on the use of these exemptions depending on whether federal or state exemptions are available and/or used. Many assets owned by debtors would not normally be considered exempt, such as bank account monies, law suit claims, boats, multiple cars, expensive jewelry, real property other than a homestead, etc. A chapter 7 trustee may generally liquidate such assets and disburse any proceeds to the debtor's creditors. Business bankruptcy debtors are not normally allowed to exempt any property.
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Fraudulent Transfer. A fraudulent transfer is generally a transfer made by a debtor with the intent or effect of reducing the assets available to creditors.
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Preference. In general terms, a preference is a payment received from a debtor by a creditor in the 90 days before the debtor's bankruptcy filing. Creditors are frequently served with motions in bankruptcy court to set aside a debtor's transfer as a preference. Creditors should consult with bankruptcy counsel because defenses do not exist for creditors in preference actions.
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Relief from the automatic stay. Although the automatic stay prohibits collection of debts by a creditor, including secured creditors, a secured creditor can ask the bankruptcy court for "relief" from the automatic stay. There are three ways a creditor can obtain relief from the automatic stay. First, a creditor is entitled to relief for "cause". Although not defined by the Bankruptcy Code, usually cause means the creditor does not feel that it has adequate protection. Second, if a creditor wants relief from stay related to an act against property, the creditor must show that  the debtor does not have equity in the property and that the property is not necessary to an effective reorganization. Third, a creditor is entitled to relief if its claim is secured by "single asset real estate," unless the debtor files a plan that is likely to be confirmed or the debtor makes monthly payments to the creditor equal to interest at current fail market value on the balance of the creditor's interest in the real estate.
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Trustee. There are several "types" of bankruptcy trustees. The United States Trustee is responsible for oversight of the bankruptcy process as a whole. The United States Trustee's duties are to maintain and supervise a panel of private trustees (usually, but not always, private attorneys) to serve in Chapter 7 cases, review fee applications filed in Chapter 11 cases, monitor plans and disclosure statements in Chapter 11 cases, monitor activities of creditor's committees, monitor the progress of Chapter 11 cases, and assist the United States Attorney in criminal prosecutions.

The United States Trustee appoints the trustee in a Chapter 7 case from a panel of private trustees. A Chapter 7 trustee is responsible for representing the interests of the debtor's estate and creditors as a whole. In a Chapter 13 case, a "standing" trustee is appointed by the United States Trustee to conduct the duties of the United States Trustee in Chapter 13 cases.
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Involuntary bankruptcy. In some cases, creditors may file a petition to commence an involuntary bankruptcy. Creditors may commence a Chapter 7 or a Chapter 11 case if they hold the required amount of debt.
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Voluntary bankruptcy. A debtor files a petition to commence a voluntary bankruptcy.
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Bankruptcy Guide

For cases filed on or after October 17, 2005
For cases filed on or before October 16, 2005

Designated by the Martindale Hubbell Bar Register as one of the Pre-Eminent Law practices in the United States