This year, 2018, is an important year for Watt Tieder because we are celebrating our 40th anniversary. It goes without saying that Watt Tieder’s growth over the past forty years is a significant achievement. Adding to this growth is the strength of our Creditors’ Rights and Bankruptcy Group, which I have the honor to lead.
At the beginning of 2017, I joined Watt Tieder and brought my Creditors’ Rights and Bankruptcy practice to the firm. Since we bring new capabilities to the firm, we wanted to explain the breadth of our practice and how we can help and serve clients.
Simply put, we handle business matters that involve creditors’ rights, bankruptcy and other insolvency related issues. Our services range from more traditional litigation, collection and recovery techniques to negotiating debt restructuring and work-outs. We have a national practice and a diverse set of clients. They include banks and other financial institutions, landlords, real estate investment companies, sureties, contractors, estates, non-profits, home builders and other parties in the construction industry.
In the past year, we have had many achievements for our clients, several of which I highlight below. Our effective work is the result of the support that Watt Tieder has provided the Creditors’ Rights and Bankruptcy Group, as well as the opportunity to work with such a talented and dynamic group of attorneys each day. Each situation is unique. However, our achievements roundly demonstrate our methods and how we turn lemons into lemonade for our clients.
- For a Pennsylvania-based bank, we successfully obtained significant confessed judgments against the bank’s borrower (a Maryland-based company) and guarantors. We garnished all of the company’s bank accounts, cutting off its access to cash completely. The borrower turned to the bankruptcy court for protection, but we obtained several bankruptcy court orders to protect the bank that proved useful in the long run. Using the tools available under the Bankruptcy Code, we discovered that the company was diverting funds in violation of the bankruptcy court orders that we obtained for the bank. In response, we successfully moved the bankruptcy court to appoint a chapter 11 trustee and wrested control of the company away from its owners. The trustee currently operates the company and is in the process of completing contracts, winding the business down, and prosecuting claims against third parties who were improper recipients of cash. With the trustee in place, our client receives accurate information regarding the debtor and has a stronger hope of recoupment than it would if the displaced owners continued to run the business.
- In Long Island and Brooklyn, New York, we conducted debtor exams on behalf of a surety against several indemnitors who are facing significant judgments on defaulted indemnity agreement obligations. We learned that an indemnitor had recently cashed-out a significant life insurance policy and was attempting to use the funds. With this information, the Watt Tieder team obtained immediate relief from the court, which ordered that the funds be paid to the registry of the court to protect the surety and preserve the cash from dissipation. At this time, the money remains in the registry of the court, poised to pay the surety when final judgment is entered.
- In Montana, on behalf of another surety, we intervened in a chapter 11 bankruptcy case to increase the anticipated return to such surety by over five-fold. In addition, due to our significant contribution that benefitted not just the surety, but other similarly situated creditors, we successfully petitioned the bankruptcy court for payment of a portion of our legal fees so that the surety could be reimbursed for the fees that it paid to Watt Tieder.
- In the State of Washington, we negotiated for and obtained full payment on a surety’s claim in a chapter 7 bankruptcy case. Payment included all of Watt Tieder’s legal fees and the surety’s loss adjustment expenses. What is more, we monetized a portion of the hours spent by the head of surety clams on the file. We successfully negotiated with the chapter 7 trustee to pay additional money to the surety on account of the surety’s internal time on the file.
- We are also active in the Toys “R” Us bankruptcy case that is pending in Richmond, Virginia. As you may have read in the newspapers, Toys “R” Us’ bankruptcy attorneys have been wildly successful in the bankruptcy case. They have successfully prosecuted all of their motions in the case, even obtaining court authority to pay tens of millions of dollars to the same executives whose poor business decisions, in part, lead to the bankruptcy filing in the first place. By my count, there has been only one instance where Toys “R” Us has “lost” a motion. Who did Toys “R” Us lose to? Watt Tieder. We filed a motion seeking relief from the automatic stay so that our client could extricate itself from the bankruptcy case and obtain adjudication by a state court on its claims against Toys “R” Us. Our written motion was so persuasive that Toys “R” Us called to concede, saving the client the significant cost of going to trial.
- On behalf of a bank client, we completed a work-out involving a grocery store in a strip mall that served as the bank’s collateral. The borrower operated a grocery store and owned the real estate that housed the store. The real estate and all of the borrower’s assets where pledged as collateral to the bank. When the bank retained us, it had little control over its collateral and the borrower was behind in debt service. Using tools available to us under state law, we removed the borrower from control of the grocery store and placed the real estate into receivership. We selected our own receiver and management team. Next, we kicked the borrower grocery store out of the real estate that it owned, and re-negotiated a new store lease in the space with another grocery store. This allowed the bank to receive regular debt service on its troubled loan from a party who was more solvent than the borrower. We then set about finding interested bidders who would be willing to purchase the property at a foreclosure sale and take an assignment of the new grocery store lease. The income stream from the new lease pushed up the value of the bank’s collateral significantly, and helped bring interested buyers to the table. Our foreclosure sale was successful, resulting in a significant recovery for the bank.
- In Indiana, we successfully caused the ITT Educational Services bankruptcy estate to pay a significant rent claim to our client. Our client received cash before other similarly situated creditors and was able to close its file and re-lease its space to someone new, without becoming embroiled in the bankruptcy case.
- Most recently, in Maryland, we were approached by a landlord client who owned an office building. The landlord’s most visible tenant enjoyed a below-market lease for space that could be re-let at a significantly higher rental rate. The tenant filed a chapter 11 bankruptcy. During the bankruptcy, due to the significant value in the lease, the debtor-tenant could have sold and assigned its lease to make a profit. The landlord’s charge to Watt Tieder was to reclaim the space so that it could be re-let at an appropriate market rate. As part of the litigation, we took a professional but extremely aggressive deposition of the tenant’s corporate designee. The next day, the tenant’s attorney called and agreed to our client’s demands. Not only did we reclaim the space, we required the tenant to maintain monthly payments to our client during the entire case. Thus, we accomplished the client’s goal to recover his space, plus made sure that the client continued to receive cash from his adversary during the bankruptcy litigation.
During my eighteen years of practice, I have learned that smart, consistent, and tenacious legal strategy is the most effective way to deliver results. To that end, our group typically implements an aggressive and strong approach in order to obtain the results that we can for our clients. I would be remiss if I did not express my gratitude and acknowledge my clients for putting their trust in me and allowing me to represent their interests vigorously. There is no better feeling than delivering a great result that allows the client to close a chapter on a problem file.
If you find that you are in need of creditors’ rights, bankruptcy, or other insolvency-related help, please give me a call. I would be delighted to assist you in any manner that I can.