Joseph C. Barsalona II Quoted in The Deal Regarding Lunya Co. Subchapter V Bankruptcy Case
Joseph C. Barsalona II, partner in the Bankruptcy, Restructuring & Creditors’ Rights practice at Pashman Stein Walder Hayden P.C., was recently quoted in an article in The Deal titled, “Lunya Secures Subchapter V Milestone.” Barsalona represents debtor Lunya Co. in its bankruptcy proceedings under Subchapter V of the U.S. Bankruptcy Code. The article discusses how Lunya’s bankruptcy proceedings could have implications for an increasingly important portion of the bankruptcy code and that for certain debtors with less than $7.5 million in debt, the Subchapter V process is cheaper, quicker, and more efficient than a normal Chapter 11 filing, with no need for a disclosure statement, unsecured creditors committee or creditor class prioritization.
“Lunya was a very fast and efficient case, but we did not get the necessary creditor support to get an immediate discharge upon confirmation and, at the time of confirmation, would seemingly need to complete plan payments over three years. Post-confirmation, however, the company was able to obtain financing that would pay all claims off under the plan based on our projections at the time of confirmation (which did not include the financing as new disposable income) and allow the company to exit bankruptcy years earlier than anticipated,” said Joseph C. Barsalona, who served as Counsel to Lunya Co.
It’s a result that’s only obtainable in Subchapter V, Barsalona noted. Within Subchapter V, "any upside for the company not anticipated at the time of confirmation flows only to the reorganized business.”
“Equity holders of small businesses should understand this is the only restructuring option in the world — that is not an exaggeration — that allows equity to retain its interests while discharging senior priority debt and being afforded all of the valuable tools of being a debtor-in-possession under Chapter 11,” said Barsalona.
To read the full article in The Deal, click here.
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