Calfee Connections

Economic uncertainty can create challenges for even the healthiest businesses. As market conditions shift, companies may find themselves confronting a difficult reality: a customer, vendor, borrower, supplier, or other valued business partner is experiencing financial distress. When that occurs, the questions come quickly. How can a business protect itself? What actions should be taken before a bankruptcy filing? Are there opportunities to improve recovery if bankruptcy becomes unavoidable?

Understanding the options available to creditors during periods of financial distress can make a significant difference in protecting business interests and maximizing potential recoveries. While every situation presents unique facts and legal considerations, proactive planning and strategic decision-making can help creditors navigate uncertainty more effectively.

This eight-part blog series explores key issues businesses should consider when a business partner's financial condition begins to deteriorate. Topics will include:

• Recognizing common warning signs of financial distress and evaluating potential exposure.
• Understanding involuntary bankruptcy and when it may be an appropriate strategic remedy.
• Taking practical steps to protect creditor rights before a bankruptcy filing occurs.
• Examining the fiduciary obligations of directors and officers as companies approach insolvency.
• Identifying potential avenues of recovery beyond the debtor's assets, including claims against management and available insurance coverage.
• Recognizing red flags that may indicate misconduct, self-dealing, fraudulent transfers, or breaches of fiduciary duty.

The reality is that a bankruptcy filing does not always mark the end of a creditor's recovery options. In many cases, meaningful opportunities exist both before and after a business enters bankruptcy. The key is understanding those opportunities early and acting strategically.

In the weeks ahead, Calfee Partner Andy Owen will examine these issues in greater detail and provide practical insights for businesses seeking to protect value, minimize risk, and position themselves for the strongest possible recovery outcomes when dealing with a financially distressed business partner.

Next in the series: Is Your Business Partner Showing Signs of Financial Distress? What Creditors Need to Know.

Read the comprehensive article: “Potential Avenues of Recovery Against an Economically Distressed Business” by Andrew W. Owen, Partner.

Andy Owen is an experienced business litigator who represents clients in the commercial mortgage-backed securities industry and both large and small corporate entities in a wide variety of complex business-related disputes. Andy focuses his commercial mortgage-backed securities litigation practice on the default administration on behalf of corporate trustees and master and special servicers of commercial mortgage-backed securitized trusts. He has significant experience in all aspects of workouts, foreclosures, deeds-in-lieu, bankruptcy proceedings, and receiverships involving multimillion-dollar commercial properties such as hotels, office buildings, shopping centers, and apartments. You can contact Andy via email at aowen@calfee.com or by phone at 614.621.7751.

Calfee, Halter & Griswold LLP is a full-service corporate law firm with 170 attorneys and professionals in Cleveland, Columbus, Cincinnati, and Indianapolis. Calfee serves clients in the Midwest, nationally and globally in the areas of Corporate and Finance, Employee Benefits and Executive Compensation, Energy and Utilities, Estate and Succession Planning and Administration, Government Relations and Legislation, Intellectual Property, Labor and Employment, Litigation, and Real Estate Law. Calfee has been recognized as a leading law firm by Chambers USA 2026 in Antitrust, Banking & Finance, Construction, Corporate/M&A, Employee Benefits & Executive Compensation, Energy & Natural Resources, Environment, Government Relations, Insurance, Intellectual Property, Labor & Employment, Litigation: General Commercial, Litigation: White-Collar Crime & Government Investigations, Public Finance, and Real Estate, and by Chambers HNW 2026 in Private Wealth Law. A founding member of Lex Mundi, Calfee offers international representation through a network of independent law firms with access to 22,000 attorneys located in more than 125 countries. Additional information is available at Calfee.com.