Young bankruptcy attorney was approached to file a Chapter 11 for an LLC developing a condo complex, with a foreclosure sale looming. Should they take the case, she asked me.
For all the reasons I’ve written before, I thought no, not this case, not now. After we discussed the difficulties of a single asset case with no regular income and a secured lender intent on foreclosing, it occurred to me that there was another, non-malevolent reason the case was offered to an unlikely attorney: the more experienced attorneys recognized the difficulties the facts presented. The prospects for success with this case were dim.
Unlike Chapter 13, in Chapter 11 you have to get the affirmative vote to accept the plan from at least one class of creditors. Who, in this scenario, is going to vote for the plan? If the foreclosing lender was willing to deal, dealing doesn’t require a Chapter 11. If they aren’t willing to deal, with no regular income and no employee jobs to preserve, there is little reason for a bankruptcy court to thwart the secured lender for long.
The principle involved here, looking at the likelihood of success before taking a case, applies to all clients. Consider whether the client is interested in you because other, more experienced lawyers won’t touch the case. The margin of profit is often in the cases you don’t take.
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