Knowledge is Power. Always be Empathic. Continuing my exploration of the negotiation myths challenged by Dan Oblinger and Allan Tsang in Negotiation Mythbusters, here I explore the validity of the above two truisms in the context of mediation and negotiation. Is Knowledge Really Power? The authors challenge three myths related to knowledge:  Knowledge is Power, Whoever Knows the Most About the Other Side Wins, and Just Ask All the Right Questions.  Why are these negotiation myths?  Because intentions matter.  Knowledge acquisition sought for dominance causes more harm than good.  In contrast, knowledge sought for connection, understanding, clarification, or problem solving, can pave the path to an agreement. Discovery and understanding of the underlying issues and concerns of each party may be critical to negotiation or mediation, but the act of acquiring knowledge, in and of itself, is not.  Interrogations to gather information may be perceived as aggressive or controlling and chill the process.  Too much information can lead to analysis paralysis.  A misunderstanding of information can lead to increased conflict or distrust.  Irrelevant information can lead to confusion and distraction. Regardless of the questions asked, listening and observation are critically important aspects of information sharing.  According to author Dan Oblinger (a former FBI hostage negotiator), when the FBI trains hostage negotiators, they focus more on listening and observation than on asking questions. When combined with listening and observation, the give and take of sharing information can build connections, open up new avenues of resolution, change viewpoints, and provide clarity. Is Empathy Always Necessary? Empathy is often a bridge to resolution.  Parties may need to feel seen and heard before they can turn to closure and resolution.  Parties may seek validation before they can accept compromise.  Empathy is fundamental to human connection and often a linchpin to reaching an agreement.  But empathy is not always necessary or effective. Some parties simply do not need empathy to move forward.  Some disputes are simple economic value propositions.  Some people are uncomfortable receiving empathy, while others are uncomfortable being empathic. There is no magic formula to negotiation or mediation.  It is not one-size-fits-all.  Accordingly, while sometimes empathy is essential, other times it is unnecessary or even detrimental. Knowledge and empathy are two sides of a coin.  On the positive side, each can be used for human connection and to support problem-solving and resolution.  On the negative side, if used improperly, each may be manipulative or controlling.  While knowledge and empathy may be critical to a successful mediation or negotiation, intentions matter too. Author’s Note: As a mediator, I am a “forever student” always seeking new ways to help people find a path to resolution in mediation.  “Negotiation Mythbusters” by Dan Oblinger and Allan Tsang inspired this post.  Reading their book challenged my view of many oft-touted truisms about mediation and negotiation.  If you aren’t a reader, but still interested in what they have to say, then you may enjoy this podcast in which they talk about their book: Negotiations Ninja Podcast, Busting Negotiation Myths with Dan Oblinger and Allan Tsang (July 27, 2020), https://www.negotiations.ninja/podcast/busting-negotiation-myths-with-dan-oblinger-and-allan-tsang-ep-146/. Bursting Bubbles - Challenging Mediation Truisms (Part 2) The post Mediator Insights: Bursting Bubbles by Challenging Mediation Truisms (Part 2) appeared first on Sylvia Mayer Law.

Trust is Necessary. The Best Negotiated Outcomes are Win-Win. Are these two oft-touted truisms really true?  Dan Oblinger and Allan Tsang challenge these and other “myths” in Negotiation Mythbusters.  Thought-provoking and insightful, their book forces us to think more deeply about the fundamental underpinnings of negotiation and mediation. Is Trust Necessary? Think about it for a minute.  Do you trust a stranger (i.e., the mediator)?  Or someone who just sued you or breached your contract (i.e., the opposing party)?  Probably not.  But you can still negotiate and mediate with them.  You can still reach an agreement or compromise.  So, is trust necessary? Often what we refer to as “trust is necessary” in a mediation or negotiation is shorthand for recognizing the critical importance of safety, consent, and connection. Safety.  Parties must feel safe to engage in a negotiation.  They need to feel safe to ask questions and share information.  They need to be open and present to engage fully in the dialog necessary to find a path to resolution.  How do we create a safe space?  Through consent and connection. Consent.  It is not a negotiation if one party cannot say no.  Each participant must have the right to consent – to say yes or no – for the parties to engage in a negotiation.  The ability of either party to say no is what encourages both parties to seek out solutions and find a path to resolution. Connection.  Mediators often use trust-building tools to connect with parties in a mediation.  This connection then allows parties to feel safe sharing their emotions, concerns, goals, and interests.  In turn, through sharing, exploration, and validation, parties become receptive to new ideas, compromise, and resolution. Is Win-Win the Goal? The concept of “win-win” comes from game theory.  But games and negotiation are very different.  Even for cooperative games (win-win situations), games have clearly defined winners and losers.  Games also have detailed rules, a distinct start and end, and a pre-determined and agreed-upon definition of what it means to win. In contrast, negotiation and mediation are forms of complex human interaction.  There may or may not be rules governing the process.  There is no distinct start and end.  There is no pre-determined and agreed-upon definition of what it means to win.  Instead, what is perceived as a “win” varies by party and may evolve over time. Oblinger and Tsang bust the myth of win-win by pointing out the obvious – negotiation (and, by extension, mediation) is not a game.  Durable agreements must be mutually beneficial, but mutually beneficial is not the same thing as win-win. While the distinctions drawn above may be seen as semantic, the authors’ points are well taken that consent and safety are at the core of successful mediation and negotiation, rather than trust and win-win. Author’s Note: As a mediator, I am a “forever student” always seeking new ways to help people find a path to resolution in mediation.  “Negotiation Mythbusters” by Dan Oblinger and Allan Tsang inspired this post.  Reading their book challenged my view of many oft-touted truisms about mediation and negotiation.  If you aren’t a reader, but still interested in what they have to say, then you may enjoy this podcast in which they talk about their book: Negotiations Ninja Podcast, Busting Negotiation Myths with Dan Oblinger and Allan Tsang (July 27, 2020), https://www.negotiations.ninja/podcast/busting-negotiation-myths-with-dan-oblinger-and-allan-tsang-ep-146/. Bursting Bubbles - Challenging Mediation Truisms (Part 1) The post Mediator Insights: Bursting Bubbles by Challenging Mediation Truisms (Part 1) appeared first on Sylvia Mayer Law.

Pennsylvanians receiving Social Security Disability Insurance (SSDI) benefits may wonder whether or not they can still hold a job and earn additional income. While you can, you’ll be limited on how many hours you can work. Generally, self-employed SSDI benefit recipients in Pennsylvania are limited to working just 45 hours a month. Non-self-employed recipients are limited on income, meaning they can likely only maintain a part-time job at the most. The Social Security Administration (SSA) keeps track of working hours and income to ensure recipients remain eligible. If you work too much, the SSA can revoke your access to SSDI benefits. It’s important to consult an attorney so that you understand how many hours you can work while maintaining access to permanent disability benefits in Pennsylvania. Our lawyers are dedicated to helping disabled Pennsylvanians take advantage of the benefits available to them. For a free case evaluation with the Pennsylvania disability lawyers at Young, Marr, Mallis & Deane, call today at (215) 515-2954. How Many Hours Can I Work While on Permanent Disability in Pennsylvania? If you’ve recently been injured in a catastrophic accident or diagnosed with a life-altering disability, you may be eligible for Social Security Disability Insurance benefits. Before you start receiving benefits, it’s important to learn whether you can still earn an income and how many working hours you’re limited to working in Pennsylvania. SSDI benefit recipients in Pennsylvania who are not self-employed do not have to abide by a specific number of working hours to remain eligible for benefits. Self-employed SSDI benefit recipients who don’t receive an hourly wage are limited to working just 45 hours a month in Pennsylvania. Generally speaking, non-self-employed SSDI benefit recipients can only work a part-time job if they want to earn additional income. If you were able to work a full-time job, it is likely you would not qualify as “disabled” under the SSA’s definitions, and you would be denied benefits entirely. The number of hours you can work will depend largely on your salary or hourly wage, so it’s important to contact a Philadelphia disability lawyer for clarification. How Much Money Can I Make While on Permanent Disability in Pennsylvania? Individuals receiving SSDI benefits in Pennsylvania that still work part-time and are not self-employed can only earn a certain amount of additional income per month. If you earn more than the limit, you could unknowingly enter into a Trial Work Period and ultimately lose access to SSDI benefits completely. Substantial Gainful Employment Limits While SSDI benefit recipients aren’t limited by a specific number of working hours if they’re not self-employed, they can generally only earn $1,350 in additional income. Permanently blind Pennsylvanians can earn up to $2,260 per month in income and remain eligible for SSDI benefits. These thresholds are known as substantially gainful employment limits. That said, things can get complicated if you earn over $970 in a month, even though that’s below the threshold. This threshold is used for something called a “trial work period” (TWP). If you expect to earn over $970 in additional income while receiving SSDI benefits, speak to a Pennsylvania attorney. It’s important to understand the potential implications of working too much and how doing so can impact your access to SSDI benefits. Trial Work Period Limits When SSDI benefit recipients in Pennsylvania earn over $970 in a month, they will automatically enter into a TWP. Trial work periods last for a total of nine months, after which SSDI benefits may get revoked. Following a nine-month period of earning over $970, there will be a grace period where you can still receive benefits. This grace period includes the month your benefits cease and the following two months. After that, Pennsylvania residents remain in a re-entitlement period for 36 months. TW Ps can be helpful for Pennsylvania SSDI benefits who want to see if they’re capable of returning to work. That said, they can be difficult to manage. Your Quakertown disability lawyer can help you avoid a TWP or use it to your advantage so that you can still receive SSDI benefits while maintaining a job. What Happens if You Work Too Much You could lose access to your SSDI benefits if you work too many hours and earn above the threshold in Pennsylvania. This can also happen if you unknowingly enter into a TWP and proceed to earn too much over nine months. Obviously, this is not ideal for individuals who expect to receive permanent disability benefits in Pennsylvania. Tracking your income and working hours can be difficult, so it’s wise to consult an experienced attorney to help you ensure you don’t work too much and earn over the limit to receive SSDI benefits in Pennsylvania. How Are Working Hours Tracked for Pennsylvanians Receiving Permanent Disability Benefits? The Social Security Administration will track your working hours and additional income if you’re an SSDI benefit recipient in Pennsylvania. Tracking methods vary depending on whether a recipient is self-employed or not. If you’re self-employed, the Social Security Administration may use one of two methods to track your monthly working hours. If you’ve received SSDI benefits for over two years, or if you do freelance work or start a small business, the SSA will track your working hours using the countable income test. If you’ve been receiving SSDI benefits for less than two years, the SSA will use what’s known as the three tests, which include the significant services and income test, the comparability test, and the worth of work test, to track your monthly working hours. Pennsylvanians who are not self-employed but wish to continue to work while receiving SSDI benefits will also have to report their monthly income to the SSA. Using this information, the SSA will track your monthly income to ensure you are not working too much and are still eligible for SSDI benefits. How Many Hours Do I Have to Work to Qualify for Permanent Disability Benefits in Pennsylvania? Before qualifying for permanent disability benefits in Pennsylvania, you must have a work history. With this information in mind, Pennsylvanians may wonder how many hours they must work to qualify for SSDI benefits at all. One of the major eligibility requirements for SSDI benefits in Pennsylvania is having a work history. You may have noticed that taxes are taken out for Social Security when you get your paystubs. By working overtime, Pennsylvanians essentially pay into the system, making them eligible for SSDI benefits if they sustain a permanent disability. The more hours and years you work, the more credits you get. Generally, individuals with 40 work credits, or those who have worked upwards of ten years, are eligible for SSDI benefits. That being said, younger Pennsylvanians may still be eligible for SSDI with even fewer credits. It’s important to contact an experienced West Chester disability lawyer to learn whether or not you’ve worked enough hours to qualify for SSDI benefits. Call Our Pennsylvania Attorneys Today to Learn More About Permanent Disability Benefits If your permanent disability benefits have been revoked because you worked too many hours in Pennsylvania, reach out to our attorneys. For a free case evaluation with the Springfield disability lawyers at Young, Marr, Mallis & Deane, call today at (215) 515-2954.

Tax Refunds & Filing Bankruptcy What Could Happen To Your Tax Refund If You File For Bankruptcy? Most people who have looked into bankruptcy know that several of their assets could be at risk, especially if they file Chapter 7 versus Chapter 13. There is a trustee assigned to every bankruptcy case that has a wide range of authority and may sometimes seize a debtor’s assets to sell and pay off creditors. Depending on your financial situation, one asset you may be reluctant to put at risk is your tax refund. For so many Arizona families, a tax refund can be crucial to catching up on expenses incurred throughout the year. But even expecting a tax refund, your debts may have gotten to a point that can no longer be put on hold. Tax Refunds & Chapter 7 Bankruptcy In Arizona When you file Chapter 7 bankruptcy, any asset that isn’t protected by a bankruptcy exemption can be taken away by your bankruptcy trustee. Your trustee will sell the asset at auction if applicable, and distribute the proceeds amongst your creditors, keeping a percentage for himself as well. Arizona only allows for the use of Arizona state bankruptcy exemptions, and not federal bankruptcy exemptions as some other states do. This is unfortunate, because the federal exemptions offer a wildcard exemption that can be used on any asset of $1,250, plus up to $11,850 of any of the debtor’s unused homestead exemption. Arizona doesn’t offer a wildcard exemption. Arizona only offers a $300 cash-on-hand (and in bank accounts) exemption for the day of filing, which doubles to $600 for married couples. Nowadays, this is barely enough to buy a tank of gas and a week’s worth of groceries, so it likely won’t help protect your tax refund. Arizona is one of the only states that doesn’t protect tax refunds in bankruptcy. So what happens to your tax refund will depend in part on when you file bankruptcy and when you receive your tax refund. Ideally, you would wait until you have received your refund and spent it on reasonable things before filing your bankruptcy petition. Reasonable expenses include medical and dental bills, new furniture and appliances, stocking up on groceries and household supplies, and your bankruptcy attorney’s fees. If your tax return is already dispersed and spent before you file your bankruptcy, the trustee has no right to come after it. If not, your trustee could take your tax refund, even after your case has been discharged. The amount they can take depends on the month in which your bankruptcy case was filed. Turnover Tax Refunds Sometimes, if you owe interest and other fees to the IRS, this may be offset from your tax refund. Let’s say you owe the IRS $300, and your tax return is $1,000. Eventually, you are distributed $700. Your bankruptcy trustee is only entitled to take $700, the amount you actually received, versus $1,000, the actual amount of your tax refund. Tax Refunds and Chapter 13 Bankruptcy in Arizona Filing Chapter 13 bankruptcy works much differently than filing Chapter 7. Your debts will be paid off in a payment plan of 3 or 5 years. You will pay off mandatory debts and as much additional debt is possible based on your disposable monthly income. Disposable monthly income is calculated by first taking your last six months of income to find your average monthly income. After finding your average monthly income, you will deduct mandatory monthly expenses to determine your disposable monthly income. If you don’t have sufficient disposable monthly income to repay your unsecured nonpriority debts in your 3- or 5-year plan, they will be discharged as if in a Chapter 7 bankruptcy. However, if you are going to discharge unsecured nonpriority debts in your Chapter 13 bankruptcy, you probably won’t get to keep your tax refund. Typically, you will only get to keep your tax refund while in an active Chapter 13 bankruptcy if your plan arranges for 100% repayment. Financial Hardship Exception You should always expect that you won’t get to keep your tax refund in a less than 100% Chapter 13 payment plan, but there are exceptions in limited circumstances. You can file a modification in your Chapter 13 plan asking the trustee to excuse your tax refund. The modification must describe the amount you want excused, and what kind of financial hardship you will face should you not be allowed to keep the tax refund. The trustee will be more likely to approve your modification if it is for something unexpected, such as a mechanic’s bills after a car break down, rather than something you should have already budgeted for, like groceries. You should hold onto the receipts for any unexpected expenses around tax season if you are in an active Chapter 13 bankruptcy. You will need to file a modification for each year that you wish to keep your tax refund while in your payment plan. Reasonable Ways to Spend Your Tax Refund Whether you file Chapter 7 or Chapter 13, the bankruptcy trustee is more likely to let you keep your tax refund if you spend it on something considered reasonable. You probably have already guessed that trips to Las Vegas, expensive nights at restaurants, and designer clothing and accessories will catch the trustee’s attention. Some of the items you may consider spending your tax refund on include: Maintenance and repairs on an exempt vehicle Educational costs Repairing or replacing household items Dental and medical procedures (not cosmetic) Bankruptcy filing fees and attorney’s fees Mortgage, rent, and utilities There are a few things you’ll want to specifically avoid spending your tax refund on if you plan on filing bankruptcy. The trustee will be reviewing your finances for preferential payments for months leading up to your bankruptcy. If you pay back debts owed to your friends and family members in favor of the rest of your creditors, this money can be taken back by the trustee to distribute more fairly amongst your creditors. If you pay some of your bills in advance too far ahead, this may not be protected as an asset in your bankruptcy. Again, luxury goods likely aren’t protected in a bankruptcy, and you should avoid wearing them to your 341 Meeting of Creditors. Talk to an Arizona bankruptcy attorney about additional concerns regarding spending your tax refund by calling 480-833-8000. Arizona’s Top Choice for High-Quality, Low-Cost Bankruptcy Representation Most Tempe bankruptcy attorneys require you to pay all of your fees- both attorney’s fees and court filing fees- up front before your petition can be filed. If you’re looking to spend your tax refund, this can be a convenient way to go through some or all of that money. Otherwise, it might be more realistic to pay for your bankruptcy fees in installments. But many bankruptcy attorneys who advertise payment plans still actually require that your fees be paid in full before filing, or a pre-filing payment plan. At My AZ Lawyers, qualified clients can utilize our Zero Down payment plan option to file their cases for no money down. To schedule your free consultation, fill out our online form or call 480-833-8000. The post Tax Refunds & Filing Bankruptcy appeared first on My AZ Lawyers.

As noted in my prior article, receptivity is being open to listening and accepting new information, ideas, or suggestions.  In the context of mediation, receptivity is often the key to resolution (i.e., settlement).  Receptivity is also the core focus of Robert Cialdini’s Pre-Suasion: A Revolutionary Way to Influence and Persuade.  Relying on real-life situations and scientific studies, Pre-Suasion explores a myriad of ways to enhance receptivity before making any meaningful “asks.” My first article focused on word choice, focus, and connection as tools to build receptivity (https://smayerlaw.com/mediator-insights-receptivity-and-resolution/).  In this article, I focus on creating receptivity through trust-building, timing, and reciprocity and how these apply to mediation and conflict resolution. Trust. Trust is often touted as critical to mediation.  But how do we build trust with a stranger?  By using trust-building tools.  To illustrate, Cialdini looks to Warren Buffet’s letter included in Berkshire Hathaway’s annual report.  Each year, Buffet begins his letter to investors by sharing a mistake made or challenge faced over the past year.  This builds credibility, which leads to trust.  Why?  In making these admissions, Buffet is relatable (we all make mistakes), aware (he recognizes the mistake), and open (he admits the mistake).  While the letter goes on to discuss strengths and opportunities, it is how it begins that builds trust between Buffet and the investors. In mediation, parties typically arrive with a trust deficit.  Something has occurred between them that has eroded their trust.  In addition, even if the attorneys know the mediator, the actual parties may not.  Thus, there may not be any pre-existing trust between the parties and the mediator.  And yet, mediations result in settlement daily.  Why?  Because mediators use trust-building tools to help the parties find a path to resolution. Timing. Sometimes timing is everything.  Cialdini illustrates the importance of timing in the context of participating in a brainstorming session.  If you want your input to be heard and valued, then choose your timing carefully.  Do not speak shortly before the decision-maker because then they are likely mentally rehearsing their own remarks.  Do not speak shortly after the decision-maker because then they are likely re-hashing their own remarks.  Instead, choose your timing carefully.  Time your remarks so the decision-maker can actually hear your input (i.e., is receptive), rather than being distracted by their own ideas. Timing comes up in mediation and conflict resolution in many different ways.  In some cases, a party needs time to process their emotions before they can shift to focusing on resolution.  In other cases, an apology may be needed to provide closure and a path to resolution, but if the apology is offered too soon or too late it may be perceived as fake and performative.  Choose your timing based on when the receiver is most likely to be receptive.  To ascertain the right timing, the best approach is to stop, watch, and listen. Reciprocity. Those who give a benefit are entitled to a benefit in return.  This is the rule of reciprocity, which is engrained in the psyche of nearly every culture.  We learn this as toddlers and carry it with us forever. How does reciprocity show up in the real world?  Have you ever tried a sample at a grocery store?  Those samples are based on the rule of reciprocity.  Free samples boost sales of the items sampled.  In one study, a chocolate store found that customers given free chocolate samples when they entered the store were 42% more likely to buy chocolates.  Why?  Reciprocity. In mediation and conflict resolution, reciprocity and timing are interrelated.  For example, sometimes in mediation, one party may make a big move early, but then be frustrated if their expectation of reciprocity is unmet.  Why is there no reciprocity?  Because the other party is not there yet.  This does not mean that an early big move is a mistake (sometimes it is quite effective), but it does mean that you cannot rush the process.  The rule of reciprocity is most effective in a negotiation if you first give the other party the time, space, and information they need. Trust, timing, and reciprocity are three tools available to build receptivity.  Pre-Suasion is replete with other suggestions to lay the groundwork for receptivity.  Author’s Note: As a mediator, I am a “forever student” always seeking new ways to help people find a path to resolution in mediation.  Robert Cialdini’s “Pre-Suasion: A Revolutionary Way to Influence and Persuade” inspired this post.  In reading his book, I was struck by the relevance to my mediation work.  In the book, he explores a myriad of ways to enhance receptivity and focuses on laying the groundwork for receptivity before making any meaningful “asks.”  If you aren’t a reader, but still interested in what he has to say, then you may enjoy this podcast in which he was interviewed about his book:  Barry Ritholtz, Masters in Business (June 18, 2021), https://podcasts.apple.com/us/podcast/robert-cialdini-on-the-psychology-of-persuasion-podcast/id730188152?i=1000423074089. Receptivity and Resolution (Part 2) The post Mediator Insights: Receptivity and Resolution (Part 2) appeared first on Sylvia Mayer Law.

written by : Mazurkraemer Law Clerk Andrew Del Zotto- Villanova School of Law, Class of 2023 Toys “R” Us Creditors march toward trial in their adversary proceeding against former officers and managers  The case will shed light on significant issues that arise given desperate attempts of distressed businesses as they slide into bankruptcy. Photo Credit: https://www.forbes.com/sites/joanverdon/2022/01/20/former-toys-r-us-execs-board-accused-of-fraud-in-bankruptcy-decisions/ In September 2017, Toys “R” Us, Inc. and its affiliated entities (collectively, “TRU” or the “Debtors”) filed voluntary Chapter 11 petitions for relief in the United States Bankruptcy Court for the Eastern District of Virginia (“Bankruptcy Court”).  The cases were jointly administered.  At the time of the bankruptcy filing, the Debtors conducted the business of selling toys, childcare items, and related products on a global scale both online and in brick and mortar stores. In March of 2018, the Bankruptcy Court entered an Order authorizing the Debtors to wind down U.S. operations and U.S. store closings and establishing administrative claims procedures.  In connection with the wind-down, in July of 2018, the Debtors entered into a settlement agreement that resolved issues relating to the liquidation of U.S. assets.  The settlement provided for the creation of a liquidation trust (“Trust”) for the benefit of the Debtors’ creditors. In 2020, The Trust filed an adversary proceeding against the Debtors’ former officers and managers (“Defendants”) asserting a breach of fiduciary duties by: Obtaining Debtor-in-Possession (DIP) financing at the start of the bankruptcy proceeding;Authorizing retention payments to 114 company executives before the commencement of the bankruptcy proceeding; andAuthorizing the payment of $18 million of advisory fees to the Debtors’ private equity shareholders from the fourth quarter of 2014 through the first quarter of 2017.  The Trust further alleges that in an attempt to persuade its vendors to continue shipping goods and providing services to TRU on credit after the bankruptcy, Defendants misrepresented facts concerning the retailer’s ability to make payments.  The Trust claims the total amount due to vendors totals more than $600 million.  See TRU Creditor Litigation Trust v. Raether, et al, 20-03038, U.S. Bankruptcy Court for the Eastern District of Virginia (Richmond). On June 28, 2022, Virginia U.S. Bankruptcy Judge Keith Phillips made a decision that for all but one issue (breach of fiduciary duty for DIP financing – summary judgment granted), the parties are going to jury trial. Where Will the Case Go from Here? Several legal questions are poised to be decided at trial.   At the heart of the issue is a claim of breach of the former Toys “R” Us executives’ fiduciary duties.  So, did the executives fulfill breach their duties when dishing out bonuses?  While the answer to that question is unknown, the trial will almost assuredly address the actions of key Toys “R” Us executives at the time when bankruptcy was, at least according to the creditors, imminent.  During this time, bonuses were paid to 114 Toys “R” Us executives and managers, the largest totaling $2.8 million to former CEO David Brandon.  Brandon, in the failed request for summary judgement, noted: “So long as a company is not insolvent, its Board members owe a fiduciary duty to the company and its owners, and can take actions that benefit the owners to the detriment of the company.”  This comment raises another key question to be answered at trial: was Toys “R” Us already insolvent when it paid nearly $18 million to its private-equity backers – Bain Capital, KKR & Co., and Vornado Realty Trust – in the years immediately leading up to its bankruptcy declaration?  The Trust argues that “TRU had been insolvent since at least 2014” and “the officers and directors of TRU each had a fiduciary duty to protect the value of TRU for TRU’s creditors, and not merely to focus on advancing the interests of the majority equity holders-Bain, KKR, and Vornado.”  Since Judge Phillips made it clear that solvency is a question of fact, this question will need to be answered by the jury at trial.  The final major legal issue looming stems from the creditors’ allegation that Toys “R” Us spent about $600 million on goods and services while well-aware of the company’s dire financial health.  The relevant legal question is whether Toys “R” Us brass adequately disclosed to vendors that the company’s finances were in such poor shape that store closures and large-scale shutdowns were coming.  Surely, at the very least, creditors’ will be pursuing damages to recoup the losses from Toys “R” Us’ unpaid bills.  Sources: TRU Creditor Litigation Trust v. Raether, et al, 20-03038, U.S. Bankruptcy Court for the Eastern District of Virginia (Richmond).  “Former Toys ‘R’ Us Executives Face Trial Over Botched Bankruptcy,” Jeremy Hill and Eliza Ronalds-Hannon, June 28, 2022.  https://www.bloomberg.com/news/articles/2022-06-28/former-toys-r-us-execs-to-stand-trial-over-botched-bankruptcy “Toys R Us creditors’ lawsuit proceeds,” Richard Collings, June 29, 2022. https://www.axios.com/pro/retail-deals/2022/06/29/toys-r-us-creditors-lawsuit-proceeds

by Salene Mazur Kraemer, Esquire, MBA, Certified Turnaround Analyst, Board-Certified Business Bankruptcy Law Specialist image source: https://www.cio.com/article/2439314/change-management-change-management-definition-and-solutions.html “The only thing that is constant is change”- Heraclitus To pivot is to rotate, swivel, revolve, spin.  Change course.  Can your company change course in response to setbacks and an  ever-changing business landscape? Look at retail.  With the surge of online shopping, the rise of Amazon, and declining mall traffic, the retail industry has been decimated.   Social media addicted teens no longer hang out at malls for social connection.   A viral Instagram picture of a celebrity sporting a designer’s hat can spawn a new trend, not a retail storefront.   Indeed, the Internet, I Phone apps and social media have forever changed the American retail experience.  Some beleaguered retailers should have changed their business models to escape the fate of liquidation.  But how? As a business and bankruptcy attorney and turnaround consultant, I have long been a student of consumer trends and industry movements, and I regularly subject a client’s business model  to rigorous examination. Filing a chapter 11 bankruptcy petition is usually the strategic last resort choice.    In the plan process, a debtor must disclose why it filed and  the factors leading up to the filing.  A debtor must also demonstrate that a plan is “not likely to be followed by the liquidation, or the need for further financial reorganization”.  See 11 U.S.C. § 1129(a)(11) (in part). No C-Suite executive wants his or her business to be snuffed out, whether overnight or over the long-haul, by an innovation, competitor, or regulatory change.  “Organizational decay”  is the slow deterioration of a firm’s operations caused by the inability to change and adapt to shrinking financial resources, profitability and market demand.  Don’t let this happen to you.  Based on my experience and recent research of  “stories” behind Chapter 11 filings, I developed this 12-point “organizational survival” checklist for upper management. 1.        Environmental Adversity.  The C-Suite should be able to identify with specificity, external opportunities and threats, such as general and regional economic, employment, competing and industry conditions.   An economic downturn or market crash impacts interest rates and spending for technology, real estate, and advertising, to name a few.  With the rise of the internet, competition can be fatal.   Instead of  a five-mile radius, businesses must now compete with national and international companies online. Keep a close eye on new entrants. How low are barriers to entry?   Jamba Juice, the quick stop for squeezed juices and smoothies, was pushed out by the pop up of several healthy fast-food new entrants.  Consider also Pebble, a Silicon Valley startup that beat Apple in creating and launching the smartwatch in 2012. Pebble eventually lost the market completely when Apple released its watch in April of 2016.  Witness how the “athleisure” (wearing casual athletic clothing to places other than the gym) marketplace has become increasingly crowded with the entrance of big-box retailers who offer cheaper prices (i.e., Wal-Mart and Target);  the competition and price pressure has forced various retail outlets., i.e., Sports Authority, to buckle. 2.        Finance.  Cash is king. Gauge your company’s current and future ability to obtain short or  long-term financing and meet financial performance requirements.  Look at your balance sheet.  Are you overleveraged? How liquid are your assets?  A viable firm should have a strong enough cash flow to support operations and recover the fair value of long-lived assets.   Consider how long it takes for your firm to recognize revenue. Do not ignore open tax matters.  Period. 3.        Supply Chain.  Review the firm’s ability to obtain trade credit.  What is your firm’s plan B if there is a threat of disruption to your supply chain. 4.        Sales.   Do not ignore your sales figures. Has there been a material (5% or more) drop?  Price competitively and be able to articulate your competitive edge or “unique selling proposition”.  Outline and implement growth initiatives. Analyze which  product lines or services are making you the most net profit. 5.        Operations.   Execute cost-cutting initiatives.  Renegotiate lease obligations, the cost of raw materials,  or client contracts. 6.        Labor.  A healthy company will attract and retain knowledgeable, motivated, productive and skilled  labor.    Be aware of the need to communicate openly and demonstrate a continued concern for employees. 7.        Leadership. Ineffective leadership is one of the most significant causes of business failure.   Well-connected, competent and trustworthy leaders must create the agenda for change and build an implementation environment.  Avoid in-fighting and scapegoating. 8.        Technology.  Can a new invention shut down your business?  With the advent of digital cameras, SD Cards and USB cables, technology killed Kodak.  Will a new phone app push you out? Publicly-traded Rosetta Stone cornered the learn-a-new language market for years. In 2012, however, the internet and the iPhone began providing alternatives and Rosetta’s annual profit plummeted. 9.        Customer Mix and Behaviors.   A secure firm diversifies its client mix.  Savvy upper management constantly monitors a customer’s buying habits. Products or services must remain relevant.   My use of my iPhone has made items in my home obsolete (i.e., an answering machine, a landline phone, an alarm clock, workout dvds, paperback books, C Ds, and even a guitar tuner). 10.    Location.  Scrutinize location choice.  How can you increase customer traffic and ultimate conversion?  You may need to selectively shrink your footprint.   Do what auto dealers have been doing;  use showrooms, and order new inventory online at the point of sale. 11.    Marketing.  Is there a positive brand perception and recognition with staying power?  Engage in the goldmine of social media. 12.    Law.  Are you compliant with industry and trade regulations and rules? Do you anticipate regulatory or legislative change?  How likely is potential future litigation? *** One of my favorite places to be is Starbucks, a company that “sells human connection.”  In a podcast interview with Alec Baldwin,  CEO Howard Schultz  describes the up and coming, two-level, Disney-like, experiential, Starbucks stores.   “We have to keep reinventing, keep dreaming. You cannot embrace the status quo of running a business today.” So I urge you, be prepared for change. Keep reinventing.  Adapt to change and overcome.   image source: https://www.cio.com/article/2439314/change-management-change-management-definition-and-solutions.html

 What Is Chapter 7 Bankruptcy? See a very helpful article in the South Florida Report, URL below. https://southfloridareporter.com/what-is-chapter-7-bankruptcy/Jim Shenwick, Esq 212 541 6226 jshenwick@gmail.com

If you plan on filing for either Chapter 7 or Chapter 13 bankruptcy in Pennsylvania, you need to be prepared for the challenges you may face. So, before you file, it’s wise to learn why bankruptcies are most often denied in Pennsylvania. If your Chapter 7 bankruptcy was denied in Pennsylvania, it was probably because you did not pass the means test or there were procedural issues. Chapter 13 bankruptcies are often denied because filers have too much debt and not a high enough income to support a reasonable repayment plan. When bankruptcy cases are dismissed, debtors can often refile. However, a dismissed case can make Pennsylvanians liable for their debts right away, which can cause further financial distress. To avoid such headaches, hire an attorney who will support and guide you through your Pennsylvania bankruptcy case from the very beginning. Our dedicated lawyers are here to assist Pennsylvanians filing for Chapter 7 and Chapter 13 bankruptcy. For a free case evaluation with the Pennsylvania bankruptcy attorneys at Young, Marr, Mallis & Deane, call today at (215) 701-6519. Common Reasons Why Chapter 7 Bankruptcies Are Denied in Pennsylvania When Pennsylvanians face economic difficulties and need help, filing for Chapter 7 bankruptcy may be the path forward. While it’s not necessarily common for Chapter 7 bankruptcies to be denied in Pennsylvania, it’s possible. To avoid a case dismissal, Pennsylvanians need to learn the common reasons why Chapter 7 bankruptcies are denied. As long as you pass Pennsylvania’s means test, which assesses your household’s income, you will qualify for Chapter 7 bankruptcy right away. One of the most common reasons that Chapter 7 bankruptcies in Pennsylvania are denied is that debtors’ incomes are too high. That being said, Chapter 7 bankruptcy is relatively straightforward, with few eligibility requirements. Generally, denied bankruptcies in Pennsylvania stem from filing and procedural issues. Filing for Chapter 7 bankruptcy requires keen legal insight and an in-depth understanding of Pennsylvania’s Chapter 7 bankruptcy laws. Often, bankruptcy is denied because debtors don’t have a skilled attorney by their side to help them navigate this difficult process. Therefore, hiring a Philadelphia bankruptcy attorney is crucial if you’re considering filing for Chapter 7 bankruptcy. Although the process may seem relatively simple, filing errors and miscommunications can lead to a denial of your Chapter 7 bankruptcy. That can leave you without a path forward towards financial recovery for you and your family. Why Was My Chapter 13 Bankruptcy Denied in Pennsylvania? Chapter 13 bankruptcies in Pennsylvania are much more complicated than Chapter 7 bankruptcies. The former calls for a reorganization of debt, while the latter calls for liquidation. Because of this, Chapter 13 bankruptcies are often denied when debtors have too much debt and too little income or are without a skilled attorney. Too Much Debt One of the main reasons that a Chapter 13 bankruptcy may be denied in Pennsylvania is if a debtor simply has too much debt. Reorganizing your debt and figuring out a repayment plan can be difficult if you owe too much. Essentially, Chapter 13 filers need to have a total amount of secured and unsecured debt below the threshold in Pennsylvania. Your Pennsylvania bankruptcy attorney can calculate your total debt to ensure that you’re not denied Chapter 13 because you owe too much to creditors. Low Income When you file for Chapter 13 bankruptcy in Pennsylvania, you don’t have to liquidate your assets or pass a means test. Instead, your attorney will figure out a repayment plan to help you ultimately get out of debt. Unfortunately, when debtors’ income is insufficient to repay debts within an appropriate timeframe, their Chapter 13 bankruptcy may be denied in Pennsylvania. Procedural Issues Similar to Chapter 7 bankruptcies, Chapter 13 bankruptcies can be denied in Pennsylvania when filers don’t meet the procedural requirements. Filing for Chapter 13 bankruptcy is complicated. There are multiple court fees, complex paperwork, and mandatory course filers are responsible for. If you don’t have an experienced Bethlehem bankruptcy attorney, you may become overwhelmed and make an error when filing for Chapter 13 bankruptcy. If that happens, your attempt to get out of debt may be unsuccessful. What Should I Do if My Bankruptcy Case Was Denied in Pennsylvania? If your bankruptcy petition is denied in Pennsylvania, you may feel at a loss. The good news is that debtors can often refile right away. Of course, going through the filing process a second time is never ideal. That’s why Pennsylvanians should hire an experienced lawyer they can trust from the beginning. When bankruptcy cases are dismissed without prejudice in Pennsylvania, meaning no fraud was involved, debtors can reapply almost instantly. If your case was denied because of disorganization or procedural issues, hire an attorney to ensure that doesn’t happen again. If your case was denied because you didn’t meet the requirements for Chapter 7 bankruptcy, your lawyer can help you explore the benefits of Chapter 13 bankruptcy. When bankruptcies are denied with prejudice, debtors may not be able to refile for some time. This can have a damaging impact on Pennsylvanians in financial distress. Although you may be able to refile for bankruptcy in Pennsylvania if your initial case was dismissed, the automatic stay preventing creditors from collecting on your debts may disappear. This can make you liable for debts almost immediately after a dismissed bankruptcy case in Pennsylvania, even if you have intentions to refile. Filing for bankruptcy in Pennsylvania is complex. Debtors may feel discouraged and overwhelmed simply at the prospect. Instead of dealing with the stress alone, hire a lawyer. Your Chester County bankruptcy attorney can help you file the proper forms and organize your financial information so that your Chapter 7 or Chapter 13 bankruptcy is not denied in Pennsylvania. Call Our Pennsylvania Attorneys for Help with Your Bankruptcy Case If you plan to file for bankruptcy in Pennsylvania, our lawyers can help. For a free case evaluation with the Allentown bankruptcy attorneys at Young, Marr, Mallis & Deane, call today at (215) 701-6519.