B. Lane Hassler, P.C. attorney at law in Chicago and New York

BLHPC home
BLHPC practice areas
BLHPC B. Lane Hasler Attorney
BLHPC Office Locations
BLHPC Legal Links
BLHPC News
Litigation List
BLHPC Contact Us


Chicago Office
1016 West Jackson
Suite #100
Chicago, IL 60607
Tel: 312-893-0551

New York Office
80 Broad Street
Fifth Floor
New York, NY 10004
Tel: 877-394-2185

lanehasler@blhpc.com


BLHPC NEWS ARCHIVE - 2014



VIEW B. LANE HASLER, P.C. CURRENT LEGAL NEWS - 2015

Dec 2014

An unfortunate aspect of our legal system is that it can be used to extort money through improper lawsuits. The "American Rule" of legal fees requires each party to pay its own attorneys. The rest of the world has a version of "loser pays" which ensures that the plaintiff thinks long and hard before bringing a lawsuit. Not so in America where attorneys file meritless lawsuits and then threaten to drawn out litigation. Defendants are faced with either making a business decision to pay a settlement or incur legal fees in excess of the settlement amount - legal fees the "American Rule" does not allow them to recover.

B. Lane Hasler fought such a case in 2014. An equipment lessor used a venue selection clause in a pre-printed lease form to drag a Texas company into Illinois State court in Waukegan Illinois. The Texas company was in default on its senior loans so decided to allow the equipment lessor to take a default judgment which would be dealt with as part of its restructuring. However, after obtaining a default judgment, the equipment lessor put a lien on the Texas company's bank account. The senior lenders already had a blanket lien on all of the Texas company's assets, including the bank account, which lien had priority over the equipment lessor's lien, so counsel for the senior lessor asked the equipment lessor to release the lien on the bank account. The equipment lessor's attorney refused and forced the senior lessor to retain B. Lane Hasler to file a motion to quash the equipment lessor's lien. Over the next seven months, the equipment lessor's attorney ran up the cost by filing late papers, showing up late to hearings, taking positions unsupported by statute or case law, and asking for the longest extensions possible on hearings. At the final hearing on the motion to quash, the equipment lessor's counsel failed to show up to argue the motion but instead sent a local attorney to dismiss the equipment lessor's lien - something that should have been done 7 months earlier! This was a classic "legal extortion" matter which didn't work only because the senior lenders refused to be blackmailed.

Nov 2014

Bondholders need representation too. B. Lane Hasler PC represented an investment advisor who, on behalf of his clients, was purchasing the entire issue of a regional development authority bond funding the expansion of a charter school operator. This project involved reviewing all of the bond documents to ensure that the investment advisor is given proper authority to monitor the charter school operator's performance and participate in any issues regarding the bonds. In addition, this review ensures that the bondholders are receiving the proper collateral and that the Trustee is properly charged with protecting the bondholder's interests. It is a rare bond deal in which the bondholders are at the table while the deal is being structured, and this requires the other players to adjust their mindset to include the actual "end-user" of their product. B. Lane Hasler PC pushed counsel for the bond trustee, the issuer and the borrower (the charter school operator) to change "standard" language so the bondholders truly got what they were promised. The end result was a better bond for the bondholder.

Oct 2014

B. Lane Hasler PC represented a mid-sized vendor creditor in a long-running chapter 11 case in which there was no creditors committee to protect the unsecured creditors. The debtor managed to get several extensions of its time to file a plan of reorganization. The secured creditor was being paid interest and principal each month so was not interested in pushing the case forward. The unsecured creditors were being ignored. B. Lane Hasler PC was able to convince both the debtor and secured creditor that any plan of reorganization should provide an early payout option for unsecured creditors allowing them the choice of receiving full payment with interest over an extended period of time or an immediate payment of just the face amount of the claim without interest upon confirmation of the plan. This resulted in a number of claims buyers taking interest in the case allowing B. Lane Hasler PC's client to sell its claim and recover substantially all of its account, which it originally was prepared to write off.

Sep 2014

B. Lane Hasler PC represents contractors, architects and homeowners in documenting construction contracts, including all AIA (American Institute of Architects) based contracts. A particular sub-specialty is transitioning projects from one set of professionals to another either at the homeowner's request or if a professional goes out of business. In September, B. Lane Hasler PC assisted a contractor in taking over a $10 million project which was at foundation. The current contractor's arrangement had to be properly terminated. The new contractor's contract had to provide for protections against the now former contractor's work. The now former contractor's subcontracts and material supply agreements had to either be terminated or transitioned. All of this work was done in an accelerated time frame so that the project could resume and get "under roof" prior to the onset of inclement weather.

Aug 2014

B. Lane Hasler PC represented a creditor accused of violating the discharge injunction by trying to collect attorney fees and expenses awarded by a state court in a litigation with the debtor that continued after the bankruptcy filing. The debtor argued that since the litigation started prior to the date of the bankruptcy, the creditor's right to fees and expenses was a pre-petition claim that was extinguished through the bankruptcy. After briefing and oral argument, the Court ruled that because the debtor chose to continue the litigation notwithstanding the bankruptcy, the majority of the creditor's claims survived. The Court determined a specific point in the bankruptcy case when it found that the debtor made a voluntary choice to continue the state court litigation. The Court held that the creditor may collect all fees and expenses incurred after that date.

Jul 2014

B. Lane Hasler PC represented a regional bank with no offices in Illinois in an individual chapter 11 bankruptcy case filed by a guarantor of corporate obligations to the bank. This individual had relocated to Chicago and filed for bankruptcy seeking to retain the equity in certain ongoing business ventures, which were not the bank's borrowers. The first step for Lane Hasler was to uncover the extent of the debtor's assets and liabilities, neither of which were properly disclosed in the bankruptcy filings. The second step was to explore whether a payment plan could be put into place. When it was confirmed that the debtor was not going to cooperate, the third step was to get the case dismissed so the bank could foreclose and collect on its collateral. Dismissal was preferred to conversion because the bank was the largest creditor and through the chapter 11 it had exhausted its discovery of assets so a chapter 7 trustee was unlikely to add value to the collection process. Once the chapter 11 case was dismissed, B. Lane Hasler PC transitioned the case back to the bank's regular counsel to handle the foreclosure actions.

Jun 2014

B. Lane Hasler PC represented the trustee for a lender group in a battle with a bank creditor over the priority of the claims in the debtor's bank accounts. The bank creditor obtained a judgment and issued a third party citation to discover assets on the debtor's bank, thereby freezing the account. B. Lane Hasler attempted to reason with the bank creditor by proving up the lenders' security interests. When the bank creditor refused to respond, B. Lane Hasler filed a motion to quash the third party citation. The bank creditor took the position that the lenders were required to have a control agreement with the debtor's bank in order to perfect their security interest. B. Lane Hasler provided the court with statutory and case law support showing that, where a bank account holds proceeds of collateral, no control agreement is required. The court found in favor of B. Lane Hasler PC's client trustee and the lenders were able to receive the cash in the debtor's accounts.

May 2014

B. Lane Hasler PC completed the settlement of a three year litigation between its client homeowners and the original architect and contractor for their home construction.

This case required a significant amount of work in establishing the facts since the homeowners did not hire an attorney at the outset of the project to properly document the homeowners' agreements with the original architect and contractor. During the first year of the project, the original architect failed to prepare and maintain proper records and the homeowners relied solely on a title company to handle the construction payments.

The result of this loose administration was that the contractor over-billed for work and took significant deposits then went out of business. At this point a replacement contractor was brought in and the homeowners discovered that the original architect was actually owned by the now defunct contractor.

In the meantime, the homeowners were being served with mechanics liens from unpaid subcontractors and material suppliers.

While the homeowners' new architect and contractor put the project back on track, the homeowners finally hired an attorney who advised keeping the original architects in order to not delay the project.

By the time B. Lane Hasler PC was retained to take over the legal matters, the project had progressed to the point where it was very difficult to document the errors by the original architect and contractor since the new architects and contractor had obviously corrected them. Lane Hasler also discovered that the prior attorney had created little in the way of a "paper trial" regarding these errors. Finally, the decision to keep the original architect and continue to pay its invoices undercut the homeowners' claims that the architects made such mistakes. But most importantly, it was discovered that the primary person and original architect working on the project was not a licensed architect!

Against this background, B. Lane Hasler PC prepared and filed a lawsuit against the original architect and the unlicensed individual. Since the architect had insurance, a large firm was appointed to defend the action and did so with gusto. The case went through four rounds of motions to dismiss involving a multitude of complex and novel legal issues most of which could have been avoided if the homeowners had simply hired an attorney at the outset of the project to draft proper contracts with the original architect and contractor.

After the Court finally required the original architect and the unlicensed individual to answer the complaint, the case entered the formal discovery phase. Again, B. Lane Hasler PC had to work with incomplete and unorganized documents. This greatly complicated and compromised the case. Still, through discovery, B. Lane Hasler PC was able to present a credible case.

At the close of written discovery, Lane Hasler suggested and the parties agreed to engage in a series of informal "proofs" on each of the claims with the goal of established a range of settlement values. Through this process, B. Lane Hasler PC was able to get the defendants' insurance company to agree that the case had merit and that an award of damages could result. After this critical point was reached, the parties started settlement discussion.

The settlement agreement that was reached provided a meaningful resolution of the case for the homeowners. At the last minute, the large firm attorneys for the insurance company insisted on a "gag order" that prohibits disclosure of the settlement terms. The homeowners acceded in order to bring this case to a close.

The moral of this long story? A homeowner should hire an attorney up front to do proper contracts with the architect and contractor. Also, the homeowner should hire either a project manager or insist that the architect do proper payout requests rather than rely on a title company. These two steps would have cost no more than $5,000 on a seven figure project, but would have saved 20 times as much in litigation costs not to mention three years of delay in ending this project.

Apr 2014

B. Lane Hasler PC was asked to take over the representation of a creditor in a bitterly contested bankruptcy case. This case involved a family dispute, which in and of itself creates a volatile situation, but when a significant amount of money is at stake the combination is explosive. The debtor in bankruptcy was attempting to extinguish the amount owed while the client-creditor was trying to have the amount declared "non-dischargeable" meaning it would "ride through" the bankruptcy unaffected and the creditor would be free to continue to try to collect it.

In a short period of time, Lane Hasler reviewed years of litigation pleadings, motions and other documents and transaction documents in order to provide the client with a fresh perspective of her situation. The range of options was limited, but the analysis showed a viable argument to have the amount owed her declared non-dischargeable.

Lane Hasler prepared the necessary pleadings in the bankruptcy case and argued the issue before the bankruptcy court. The situation was complicated by open state law issues regarding the validity of the client's claim. The bankruptcy court concluded that these state law issues should be resolved by the state courts in a pending case which was on appeal and issued an order denying the creditor-client's request, without prejudice, in order that these state law issues be resolved before the matter is brought back to the bankruptcy court.

The creditor-client was very satisfied with this outcome. The cost of litigating in state court and bankruptcy court was almost overwhelming to the creditor-client, so the ability to put the bankruptcy case on hold was a great benefit. Now the creditor-client can focus its efforts on the state court appeals.

So it just goes to show, sometimes a tie is as good as a win for the client. It is all about knowing the true interests and meeting those in as cost effective a manner as is possible.

Mar 2014

B. Lane Hasler continues his role of salvaging cases. After a general practice attorney found that a real estate workout was outside his comfort zone, B. Lane Hasler was brought in to sort out the situation.

The first order of business was to document a cash collateral agreement with the lender allowing the client to operate its business while a restructuring of the debt was being negotiated. The lender did not want to own the property - that was obvious - but it also did not want to put any new money into the client's business. The answer was a tight operating budget with shortfalls funded by a senior loan paid by an associate of the client.

After the client's business was assured of working capital, the next step was to properly exit a real property lease, terminate a few equipment leases, "fire" a couple of unprofitable customers and unfortunately, reduce the contract workforce. Each of these steps required a review of the existing agreements and negotiation of consensual termination of these agreements. These actions put the business on track for profitability. B. Lane Hasler worked with the client's general practice attorney on several of these projects.

The final step was negotiating a new payment arrangement with the lender with lower monthly fixed payments, but a quarterly "bonus" payment based on net profits. The difficulty here was accepting the lender's "standard" documents and doing as few changes as possible while still getting terms that the client could handle.

The loan has been restructured. Now the client can focus on its business.

Feb 2014

Failure to confirm a chapter 11 bankruptcy plan and dismissal of the case doesn't mean the bankruptcy was a failure. Bankrutpcy is a tool to deal with business disputes. After a bankruptcy is filed, the parties often re-evaluate their positions which can lead to a settlement of the dispute.

After a bank obtained a default judgment against a health care company on its guaranty of an affiliate's debt, the bank froze the business' operating account. Another law firm filed a chapter 11 bankruptcy case for the health care company in order to regain access to the cash and allow the business to resume operations. But, the Bankruptcy Court refused to allow the health care company to use its cash and a motion to dismiss the bankruptcy case was filed. The health care company was on the brink of liquidation.

BLHPC was brought in to salvage the bankruptcy case. Lane Hasler quickly pulled together the proper filings to reconsider the cash decision and presented a good case why the client should be allowed access to its operating account and an opportunity to reorganize. The Bankruptcy Court granted what would become a series of orders approving the use of case and the company stabilized its business.

The bank still refused to negotiate a settlement of its claim, so over the next nine months the BLHPC team handled all aspects of this chapter 11 bankruptcy case including filing a plan of reorganization and disclosure statement. Lane Hasler discovered flaws in the bank's claim which would have, at a minimum, made the bank an unsecured creditor by attacking its security interest and, at best, eliminated the bank's claim by attacking the guaranty. Given the viable alternative restructuring presented in the bankruptcy plan and the attacks on its claim, the bank agreed to settle its claim.

Since the sole reason for filing the bankruptcy was resolved, the bankruptcy case was dismissed. The client preserved its business and was able to remove an over $1 million liability for less than $100,000 plus the cost of the bankruptcy case.

Jan 2014

A money manager bought bonds issued by a Canadian corporation which filed a restructuring case in Canada. The team at BLHPC performed a legal review of the bonds and the Canadian restructuring case to provide an analysis to the money manager of the situation and probable recovery on the bonds. Unfortunately the analysis reported that the potential recoveries were likely to be minimal, but the money manager was spared the legal expense of participating in a case with such dim prospects.

The information on this website is for general information purposes only. Nothing on this website should be taken as legal advice for any individual case. The information on this website is not intended to create an attorney-client relationship. BLHPC only accepts clients after personal consultation and execution of a written retainer agreement.


B. Lane Hasler P.C. logo

Copyright ©2007 - 2016 B. LANE HASLER, P.C. All rights reserved.