Bankruptcy & Creditor's Rights

Overview

When a debtor files for bankruptcy, the rules change immediately, and a creditor that does not act can lose ground fast. The attorneys of Hutchison & Steffen regularly serve as counsel to creditors in proceedings filed under Chapters 7, 11, and 13 of the U.S. Bankruptcy Code. With an approach that is both aggressive and thorough, we protect what our clients are owed.

We also guide troubled entities through the reorganization process and a return to profitability. The Firm routinely handles consumer and non-consumer bankruptcy matters and related bankruptcy litigation in the bankruptcy courts of Nevada, Utah, and Colorado. 

Understanding The Practice

What Are Bankruptcy & Creditor’s Rights?

Bankruptcy is a federal process under Title 11 of the U.S. Code that gives a debtor protection from creditors while their financial affairs are sorted out. The moment a case is filed, an automatic stay stops most collection activity. From that point forward, a creditor generally must protect its interests through the bankruptcy court, not around it.

Creditor’s rights is the body of law and strategy that protects what a creditor is owed once that happens. It includes filing proofs of claim, seeking relief from the automatic stay, objecting to plans and to discharge, defending preference and clawback demands, and protecting secured and priority positions.

Our focus is the creditor’s side. We represent secured, unsecured, and priority creditors, and we also guide troubled businesses through Chapter 11 reorganization when the goal is to restructure and continue operating rather than liquidate.

Bankruptcy also generates litigation. Adversary proceedings, non-dischargeability actions, and fraudulent transfer disputes are all resolved in the bankruptcy court. Our attorneys handle these matters in the bankruptcy courts of Nevada, Utah, and Colorado.

What We Handle

Bankruptcy & Creditor’s Rights Matters We Handle

01

Creditor Representation

Representing secured, unsecured, and priority creditors in Chapter 7, 11, and 13 cases, including proofs of claim, plan objections, and motions to protect our clients’ positions.
02

Chapter 11 Reorganization

Guiding troubled businesses through Chapter 11 reorganization and a return to profitability, and representing creditors and creditors’ committees in complex reorganization cases.
03

Relief from the Automatic Stay

Moving for relief from the automatic stay so a creditor can continue a foreclosure, repossession, or lawsuit against the debtor’s assets when the law allows.
04

Preference & Fraudulent Transfer

Defending creditors against preference and clawback demands, and pursuing fraudulent transfer recoveries where a debtor has moved assets to avoid paying what is owed.
05

Secured Claims & Collateral

Protecting liens, security interests, priority, and adequate protection, and litigating collateral valuation and lien priority disputes.
06

Bankruptcy Litigation & Adversary Proceedings

Handling nondischargeability actions, objections to discharge, and adversary proceedings in the bankruptcy courts of Nevada, Utah, and Colorado.

UNDERSTANDING THE DISTINCTION

Chapter 7 vs. Chapter 11 vs. Chapter 13: A Creditor’s View

Not every bankruptcy affects a creditor the same way. The chapter a debtor files under changes what happens to the debtor’s assets, how a creditor gets paid, and where a creditor should focus. The table below compares the three most common chapters from the creditor’s perspective.

Factor Chapter 7 Chapter 11 Chapter 13
Purpose Liquidation of the debtor’s assets Reorganization of a business or large debtor Individual repayment plan
Typical Debtor Individuals and businesses winding down Businesses and high-debt individuals reorganizing Individuals with regular income
What Happens to Assets A trustee sells non-exempt assets The debtor keeps assets and operates under a plan The debtor keeps assets and repays over three to five years
Creditor’s Main Concern Proving claims and tracing assets Plan treatment, voting, and feasibility Plan payments and how liens are treated
Where We Come In Proofs of claim, stay relief, and asset recovery Plan negotiation, objections, and committee work Plan objections and protecting secured claims

When Creditors Must Act

When Creditors Need to Act in Bankruptcy

In bankruptcy, deadlines are unforgiving and silence is costly. A creditor that waits can miss a claim deadline, lose priority, or watch a plan be confirmed on terms it never agreed to. The time to get counsel involved is as soon as a bankruptcy touches money you are owed.

Notice that a customer or borrower has filed, a bar date to file a proof of claim, a demand to return payments you already received, or a Chapter 11 plan that changes how you will be paid are all moments that call for prompt action. So is any sign that a debtor has hidden or transferred assets.

Our attorneys move quickly to protect creditor interests, and we take an approach that is both aggressive and thorough. Where the better outcome is a reorganization, we also guide troubled entities through Chapter 11 toward a return to profitability, across the bankruptcy courts of Nevada, Utah, and Colorado.

When Creditors Should Call Us

  • Notice that a customer, borrower, or debtor has filed bankruptcy
  • A deadline, or bar date, to file a proof of claim
  • The automatic stay halting a foreclosure, repossession, or lawsuit
  • A Chapter 11 plan that affects how and whether you are paid
  • A preference or clawback demand for payments you received
  • A debt you believe should survive the debtor’s discharge
  • A secured claim, lien, or priority position to protect
  • Signs that a debtor has concealed or fraudulently transferred assets
  • A troubled business that needs to reorganize under Chapter 11
  • Collection efforts frustrated by a threatened bankruptcy

Common Questions

Frequently Asked Questions

Does Hutchison & Steffen represent creditors or debtors?

Our bankruptcy practice is focused on the creditor’s side. We represent secured, unsecured, and priority creditors in Chapter 7, 11, and 13 cases and in related litigation. We also guide troubled businesses through Chapter 11 reorganization when the goal is to restructure and keep operating rather than liquidate.

What should I do when a customer or borrower files for bankruptcy?

Act promptly. Once a case is filed, the automatic stay stops most collection activity, so continuing to collect can violate the stay. Preserve your file, note the deadline to file a proof of claim, and have counsel review your position, because secured, priority, and unsecured creditors have very different rights and strategies in bankruptcy.

What is the automatic stay and how does it affect creditors?

The automatic stay is a court order that takes effect the instant a bankruptcy is filed and halts most efforts to collect a debt, including lawsuits, foreclosures, and repossessions. To continue collection against the debtor or specific collateral, a creditor generally must ask the court for relief from the stay, which we regularly pursue where the facts support it.

What is a proof of claim and when is it due?

A proof of claim is the document a creditor files to establish what it is owed and its priority in the case. It must be filed by a deadline known as the bar date, and missing that date can mean receiving little or nothing. We prepare and file proofs of claim and make sure a creditor’s secured or priority status is properly asserted.

What is a preference or clawback action?

A preference action is a demand that a creditor return certain payments received from the debtor shortly before the bankruptcy, on the theory that the payment preferred that creditor over others. There are several defenses, including the ordinary-course-of-business and new-value defenses. We defend creditors against preference and clawback demands and assert every available defense.

What is the difference between a secured and unsecured creditor in bankruptcy?

A secured creditor holds a lien or security interest in specific collateral, which gives it priority in that collateral and stronger rights in the case. An unsecured creditor has no such collateral and is generally paid later and often only in part. Confirming and protecting secured status is one of the most valuable things a creditor can do early in a case.

In which courts does the firm handle bankruptcy matters?

We handle bankruptcy and creditor’s rights matters in the U.S. Bankruptcy Courts for the Districts of Nevada, Utah, and Colorado. From our Las Vegas and Reno offices, we represent creditors and troubled entities in consumer and non-consumer cases and in related bankruptcy litigation throughout those courts.

chevron-down
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram