Commercial Litigation Update

When a key business relationship shows signs of financial distress, your next move could protect you—or cost you.

Key Takeaways

• Early Action Is Everything: Whether you're owed money or need a supplier to survive, proactive conversations with legal and financial advisors dramatically expand your options before problems become crises.
• Know Your Toolkit: From security interests and guarantees to debtor-in-possession financing and critical vendor programs, knowing which tools apply and when depends entirely on whether a distressed party is pre-bankruptcy or already in a proceeding.
• Legal Strategy Can Only Take You So Far: Deciding whether to keep doing business, renegotiate terms, extend credit, or walk away entirely comes down to business judgment and open communication with your counterparty—no legal strategy can replace either.

In this episode of Speaking of Litigation, Epstein Becker Green attorneys Ryan Cochran, Wendy Marcari, and Bob Mendes discuss strategies healthy companies can implement when they find themselves doing business with a financially distressed or insolvent partner—whether that's a slow-paying customer, a critical supplier, or a struggling tenant.

Since 2018, seven states—California, Connecticut, Florida, Georgia, New York, Utah, and Virginia—have enacted laws requiring specific disclosures in commercial financing transactions. Three of those enactments came in 2023, and similar bills are currently pending in a handful of other states.

While these disclosure laws share the same aim—to encourage competition and provide for a more informed decision-making process—they are quite varied with respect to the transactions and institutions to which they apply as well as the information that must be disclosed. And a ...