Bankruptcy

Paul Arcia is admitted to practice in the Bankruptcy Court in the Southern District and in the Middle District.

Paul Arcia brings his business and bankruptcy experience to assist Homeowners Association in the Bankruptcy Courts. The Bankruptcy representation extends to the Association as either a Creditor or a Debtor in Possession.

Representation as Creditors

Associations require bankruptcy court representation as Creditors. Many unit owners file bankruptcy (usually Chapter 13) to avoid paying their past due assessments to the Association. It is essential that the Association have competent and experienced bankruptcy counsel file “timely” proof of claims. Failure to timely file the proof of claim may result in the Association losing its rights to collect the past due assessments and large delays in the collection of post-bankruptcy assessments.

Representation as Debtor

Some Associations may have accumulated large debts due to a variety of reasons, or have large Court Judgments entered against them, or may have excessive litigation or high litigation exposure; in some cases a Chapter 11 Bankruptcy may be the practical solution.
The Law Firm has represented several Condominium Associations who have successfully reorganized under Chapter 11.

Associations with large debts can reorganize through Chapter 11 and pay these obligations over a five (5) year period or longer. Under certain circumstances, it is possible that the Association may obtain a reduction of its debts through negotiations with creditors. In a recent Chapter 11 case, the firm represented an Association in which a creditor did not timely file its proof of claim and the Association was able to avoid paying a claim of $ 120,000.00. In another Chapter 11 Case, Paul negotiated $ 500,000.00 of debt with creditors and was able to obtain a plan in which the Association paid seventy (70) cents on the Dollar and payable over five years.

Bankruptcy is a good tool for Association’s who have high exposure due to active litigation and/or have judgments entered against them. An Association which is plagued with active litigation is not only exposed to a Judgment in the event the Association, it is also subject to draining legal bills. On the filing of a Bankruptcy Petition, the “automatic stay’ goes into effect. The automatic stay acts as an injunction which halts all actions by creditors including lawsuits in which the Association is involved with. In one recent case, the Law Firm represented an Association with over five active state court litigation cases in which the Association had spent a $ 1,000,000.00 in legal fees over a two year period defending these actions. There appeared to be no resolution to the Association’s state court litigation cases and the Association faced large financial exposure if it lost the litigation. Paul took over the cases and filed Chapter 11 on behalf of the Association. In Chapter 11 all five cases were consolidated into the Bankruptcy Court and were resolved in an expedited basis. Most of the cases resulted in no payment to the Creditors and the case with the largest exposure was settled for ten cents on the dollar payable over seven years.