Civil Litigation for Bankruptcy or Securities Fraud

Civil Litigation for Bankruptcy or Securities Fraud

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The modern court system is used for more than car crash injury disputes or divorces. Modern American courts can also handle complex civil litigation for issues such as bankruptcy filing, securities fraud, and other business matters as well. In complex civil litigation cases such as these, a lot of money may be on the line, and naturally, each party will want highly skilled lawyers to represent their interests during that complex civil litigation. I some cases of complex civil litigation, an arbitrator may be brought on board to keep the proceedings productive, smooth, and fair, and civil rights may be protected with a lawyer such as a bankruptcy attorney. In other cases, a serious incident of securities fraud will bring certain parties to court, and complex civil litigation is bound to take place. What might one expect in the middle of all this?

Securities Fraud

Fraud is a general term for deliberately falsifying information about finances, stock, investment, and related matters, or at least presenting information in a highly misleading manner. This may be done by a company desperate to keep its investors on board, and may present false data to them to prevent them from withdrawing. In other cases, someone committing securities fraud is stealing money for themselves and falsifying records to hide that activity. These are known as white collar crimes, and even though no one is injured and no property is damaged like with other crimes, white collar crime such as securities fraud can result in serious consequences. A person caught committing such crimes may soon find themselves in court, and often, it is the affected parties such as investors who may pursue litigation against them. Stock broker fraud is another reason for such complex civil litigation, and the accused party may certainly want to find appropriate lawyers to assist them. An accused may look up local law firms who specialize in white collar criminal defense, and these attorneys will attempt to have some charges dropped or changes to lesser ones (though noting is being guaranteed here).

Bankruptcy

Bankruptcy is declared when a person, company, or similar party formally recognized that it cannot pay off its debts with its current financial situation, and it may end up in bankruptcy court. Most often, a small company may file for chapter 11 bankruptcy in particular, and these companies often take the initiative on this because bankruptcy court is a potential route to debt relief. Why might this happen? In some cases, a company has gone bankrupt simply due to poor business practices or losing its customer base, but in other situations, the company has suffered theft. Cyber crime is now common, and business data centers and even Cloud storage may be hacked into. Information such as client personal data, passwords to accounts, and bank account information may be stolen by hackers, and this can lead to massive financial losses. Such theft will greatly harm larger companies, and cyber-crime may drive smaller companies to bankruptcy entirely.

So, complex civil litigation may follow if a small company is taking on debts from various creditors and then gets the money stolen in a cyber attack. In this case, creditors will take the debtor to court (or the debtor may initiate all this for relief), and the court will attempt to resolve this debt in a manner fair and productive for all parties. A debtor may also have one or more bankruptcy lawyers on its side. During litigation or court, the debtor company may be considered DIP, or “debtor in possession,” if it has behaved honestly and fairly thus far. In this case, the debtor may retain ownership of its business and continue operating as normal, but with conditions attached. The DIP party may not, for example, take on new debt or buy or sell property outside of its normal business operations.

The debtor will be asked to create a reorganization plan, one that will allow it to pay off its debts more easily and restructure (and possibly downsize) itself. Lawyers and other professionals can help with this. When the debtor presents its plan, this plan may be accepted by the creditors and court and put into action. This may entail the partial or total liquidation of the debtor if necessary to pay off loans.

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