BANKRUPTCY - PERSONAL AND BUSINESS

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Personal Bankruptcy – Chapter 7 and 13

 

Chapter 7 bankruptcy is for individuals whose debts exceed their abilities to repay.  Generally this is because they have limited disposable income.  In most cases the debt is “consumer” debt meaning credit card debt, large medical bills or personal loans.  In other cases, the debts may be “non-consumer” debt arising from personal guarantees on business loans. The end result is a bankruptcy discharge of qualifying debt.  At the end of the process, Chapter 7 debtors obtain a “fresh start.”

 

Chapter 13 bankruptcy is for individuals who have income and could manage their debt if they had a payment plan.  The reason for the filing is because they could not service their debt as it came due and therefore fell behind.  Ultimately the bankruptcy plan will enable them to catch up on payments and pay off delinquent liabilities thereby improving their overall financial well-being. 

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Corporate/Business Bankruptcy – Chapters 11 and 7

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Chapter 11 bankruptcy is for businesses to either reorganize or liquidate their assets in order to repay debt. Most of the time, a Chapter 11 filing results in a reorganization. One of the advantages of filing a Chapter 11 petition is that Debtors can choose to cancel unfavorable contracts such as onerous leases or management agreements.  Debtors have the exclusive right to propose plans of reorganization for a limited time after which creditors may do so.  In order to make the plan effective, a statutorily prescribed percentage of the creditors have to vote to approve the plan. Businesses may also file for bankruptcy under Chapter 7, but the end result is the dissolution of the entity instead of reorganization.

 

Individuals can file under Chapter 11, but since this chapter is more complicated and generally costly, most opt for a Chapter 7 or 13 bankruptcy.

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General Differences Between Business and Personal Bankruptcy

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One of the big differences between personal and business bankruptcy is the means test. If individual’s debt is “consumer” debt, they have to participate in this test to determine if they are eligible for a Chapter 7 or a Chapter 13, while businesses do not have to prove this for a Chapter 11 filing.

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TRUSTS AND ESTATES

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Our trusts and estates practice offers a full range of asset protection and wealth preservation and transfer services.  We regularly advise entrepreneurs, business executives, professionals, families and individuals and with a wide range of assets. 

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Having practiced for decades, our lawyers have extensive knowledge and experience in dealing with the estate, gift, generation-skipping transfer and income tax laws impacting wealth transfers. We are able to assist clients in developing sophisticated and creative estate plans for the transfer and preservation of wealth from generation to generation.

 

We utilize the most efficient estate planning techniques, taking into account our client’s needs while minimizing the exposure to transfer tax penalties.  We also assist in the orderly transfer of wealth during our clients’ lifetimes and upon death.  In so doing, we take advantage of a variety of strategies available to reduce the estate, gift and generation-skipping transfer tax costs.  These efforts ideally lead to maximizing the benefits received by the beneficiaries.

 

We understand that estate planning decisions are very personal, and need to be addressed with extreme care and sensitivity to a client’s particular family situation and business concerns. Our goal is to create an estate plan that makes sense from a tax perspective while taking each family’s dynamics into consideration.

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Areas of focus include :

 

Wills and Trusts

Our lawyers prepare wills and revocable and irrevocable trusts for the transmission of property during life and at death.  We aim to take advantage of available exemptions, credits and exclusions to minimize the estate tax costs.  We also prepare health care proxies, living wills and powers attorney.  We always take time to fully explain each document so that clients can feel confident their goals have been met.

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Estate Planning Techniques

We assist clients with estate planning arrangements which are suitable to their unique needs and stage in life.  This may be a simple will.  Or it may involve creative and sophisticated estate plans to facilitate wealth transfers. Amongst the estate planning tools and techniques that we use are:

• Grantor retained annuity trusts

• “Crummey” trusts

• Family limited partnerships and limited liability companies

• Dynasty and other generation-skipping trusts

• Qualified personal residence trusts

• Sales to defective grantor trusts

• Intra-family loans

• Charitable lead and remainder trusts

• Private foundations and trusts for retirement plan benefits

• Life insurance, including life insurance trusts (for individual and second to-die policies), life settlements and premium financing.

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Estate and Trust Administration

We regularly advise individual and corporate executors and trustees with respect to their fiduciary obligations and support them in fulfilling such obligations.

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Among other services, we prepare and file all documents necessary to probate a will upon death, and assist the fiduciary in the marshalling of assets and retention of any necessary appraisers. 

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As part of our handling of the legal matters involving the estate, we prepare court-required inventories of assets if needed, fiduciary income tax returns, and federal and state estate tax returns.

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We also represent the fiduciary in audits of those returns by the Internal Revenue Service or state taxing authorities.

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In addition, we prepare the estate and trust accountings in-house to facilitate the cost-effective and timely settlement of estates and trusts, and draft the documents needed to distribute the assets to the beneficiaries and terminate the estate or trust. When required, we draft and file documents to obtain judicial approval of the account of the executor or trustee.

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We also advise the fiduciary on tax elections and discounts, and will suggest the use of disclaimers where appropriate to reduce the estate tax that is payable.

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Special Needs Individuals

We counsel parents of disabled or other special needs individuals, and are familiar with the concerns of families faced with such circumstances. We know that there are unique issues that must be considered in wills and trust documents in order to maximize the quality of care and services that will be available to children and others who face special challenges, including dealing with governmental or other alternative programs. Difficult choices are faced by parents in deciding how to provide for a child with special needs, and our experience helps clients find a satisfactory resolution.

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LITIGATION

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As litigators, we represent clients in federal, bankruptcy and state court proceedings at both the trial and appellate levels, as well as in alternative dispute resolutions (arbitration or mediation). Our clients include corporations, entrepreneurs and individuals.  Among the matters we litigate are cases arising out of debtor-creditor relationships, commercial tort, fraud and contract actions.

 

We tenaciously pursue remedies for our clients and tirelessly defend claims against our clients. But we also understand that litigation arises within a business context. Our attorneys have the experience and business acumen to analyze sophisticated transactions or business disputes and devise strategies that maximize benefits and minimize exposure for our clients.

 

We are proud of the many important, precedent-setting successes we have achieved for our clients over the years. And we are equally proud to have helped many clients to avoid protracted litigation through appropriate counseling, sound advice and negotiation.

 

We are experienced in handling a wide spectrum of disputes, including, among other areas:

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Business Dissolutions

When business relationships such as joint ventures or corporations face disputes or dissolution, individuals and corporations need representation to protect their interests in the existing business and to go on to establish new ventures. The firm has successfully represented parties involved in business relationship disputes in the courts as well as reaching negotiated settlements so as to avoid the need for litigation.

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General Commercial and Corporate Matters

We represent shareholders and partners in all types of disputes and litigation, including:

corporate and partnership law; Officer and director liability and shareholder derivative actions

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Real Estate Litigation

We understand the steps necessary to successfully litigate real estate matters, and are able to avoid pitfalls that may prevent a party enmeshed in a real estate dispute from successfully protecting its position or pursuing remedies. 

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Dispute Resolution and Litigation in Estate and Trust Matters

As part of the estate and trust representation on behalf of our clients, the firm represents fiduciaries and beneficiaries of estates and trusts in will contests, contested accountings and other miscellaneous matters involving trust and estates. When family disputes or spurious claims threaten the inheritance of a client, we take an active role in protecting our client’s rights through negotiation and litigation if necessary.

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TAX

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As tax lawyers, we provide comprehensive tax advice and representation to a broad spectrum of domestic and international clients.

In every case, our goal is to achieve the optimal tax treatment consistent with our clients' business and personal objectives. We make it a priority to keep abreast of changes in this continually evolving field

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General Corporate and Business Tax

• Counseling clients on entity selection, with an eye toward limiting tax costs, achieving civil liability insulation, and preserving tax attributes.

• Advising clients on the use of family limited partnerships, limited liability companies (LLCs) and other estate and succession planning vehicles for business interests and real property.

• Structuring business and investment transactions to maximize tax efficiencies.

• Negotiating and drafting agreements with tax implications, including shareholder agreements for C corporations and S corporations and indemnification agreements.

• Negotiating and structuring partnerships and LLCs, including preparing allocation, distribution, liquidation and other provisions.

• Representation before the IRS and state and local tax agencies, as well as in litigation in state and federal courts, including the U.S. Tax Court.

• Advising clients on a wide range of state and local tax matters, including New York State and New York City corporate and individual income taxes, sales and use taxes as well as special taxes.

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Investment Funds

• Establishing investment funds for numerous types of business assets and activities.

• Drafting documents with allocation, distribution and liquidation provisions to achieve certain compensation, economic and tax goals.

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Real Estate

• Advising real property owners and providing tax opinions regarding cooperative housing corporations and condominiums.

• Counseling foreign investors in U.S. real property with regard to Foreign Investment in Real Property Act (FIRPTA) requirements, exemptions, withholding, and related tax issues.

• Structuring and advising with regard to like-kind exchanges of real property.

• Advising on matters regarding New York City and New York State real property transfer taxes, including transfers of interests in entities and aggregation rules.

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International

• Coordinating with foreign tax advisors to maximize tax benefits to the clients.

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