Bankruptcy and Debtor-Creditor Rights

We are able to leverage our attorneys’ considerable knowledge and experience to provide cost-effective, practical legal advice and representation in connection with matters involving disputes between debtors and creditors. We represent debtors and creditors in connection with bankruptcy proceedings, priority disputes between secured creditors, custodial and liquidating receiverships, and disputes under Washington’s Uniform Voidable Transactions Act.  We also counsel clients with respect to the recovery of judgments, loan workouts, lease restructuring, and negotiated settlements. Our expertise includes the federal and state tax implications of bankruptcy, representing members of unsecured creditors’ committees, litigating shareholder disputes in receivership proceedings, and resolving disputes through workouts, restructuring, and negotiated settlements. Our depth of knowledge and experience in business, corporate, real estate and tax law enable us to provide integrated, cost-effective solutions for debtors and creditors seeking to enforce or protect their interests. The following briefly summarizes bankruptcy and other debtor-creditor rights matters – please contact us for additional information.

Chapter 7 Bankruptcy

Chapter 7 bankruptcy is a liquidation proceeding available to both individuals and business entities. The commencement of a Chapter 7 proceeding results in the imposition of an “automatic stay” that generally prohibits creditors from enforcing collection against the debtor during the pendency of the bankruptcy. A trustee is appointed to administer the bankruptcy estate, and the debtor’s non-exempt assets, if any, are collected and liquidated, and the proceeds are distributed to creditors. An individual debtor receives a complete discharge from most debts under Chapter 7, except for certain debts that are excepted from discharge under the Bankruptcy Code, such as most taxes, support obligations, student loan debt, and debts involving fraud, theft, or other wrongdoing. A Chapter 7 liquidation is generally the best option for debtors who do not have a substantial amount of equity in real property or other non-exempt assets. 

Chapter 13 Bankruptcy

In contrast to a Chapter 7 liquidation, a Chapter 13 wage earner plan allows individual debtors with sufficient income to repay all or part of their debts over time. As a general rule, a Chapter 13 wage earner plan is best suited for those debtors with substantial equity to protect in their personal residence and other assets and whose biggest problem is dealing with creditors’ demands for immediate payment, not lack of income. A Chapter 13 debtor is generally required to present a plan to resolve his or her outstanding debts over a three to five-year period while applying all disposable income to debt reduction. A Chapter 13 proceeding is supervised by a court-appointed trustee who will collect and distribute the debtor’s payments to creditors. Upon the completion of the Chapter 13 plan, the debtor’s remaining unsecured debts are generally discharged.  

Chapter 11 Bankruptcy

A Chapter 11 reorganization allows debtors – usually corporations and other businesses entities – to reorganize their debts while retaining their assets and continuing business operations. The debtor is required to present a plan of reorganization for approval by its creditors and the court that provides for the repayment of its debts over time. Although the debtor ordinarily retains possession and control of its assets and business during the pendency of a Chapter 11 proceeding, in certain instances a Chapter 11 trustee may be appointed to oversee the administration of the bankruptcy estate.  Although the vast majority of Chapter 11 cases are filed by businesses, a Chapter 11 may be an appropriate alternative for certain individual debtors, particularly those who wish to avoid the liquidation of their assets and whose debts exceed the limitations for filing a Chapter 13 wage earner plan. Chapter 11 reorganizations are considerably more costly, complex, and time consuming than Chapter 7 or Chapter 13 bankruptcies. 

Creditor Representation

Our firm provides advice and representation to creditors in connection with a wide variety of bankruptcy-related matters, including avoidance actions, preferences, priority disputes, claim litigation, and unsecured creditors’ committee activities. Additionally, we represent creditors in connection with secured transactions under Article 9 of the Uniform Commercial Code, attachment and garnishment proceedings, and actions under Washington’s Uniform Voidable Transactions Act.

Receivership and Assignment for the Benefit of Creditors

Washington’s receivership act provides a streamlined, cost-effective alternative to bankruptcy. In contrast to federal bankruptcy proceedings, which must be commenced in federal bankruptcy court, receiverships are commenced in state court and are generally more expedient and less costly than a Chapter 11 bankruptcy proceeding. In a receivership proceeding, the court appoints an independent third party, known as the “receiver,” who oversees the management and disposition of the debtor’s property or business enterprise. There are two types of receiverships – general and custodial. In a general receivership, the receiver takes possession and control of substantially all of the debtor’s property or business and has the power to liquidate the property and distribute the proceeds to creditor. By contrast, the authority of a custodial receiver is limited to specific property and does not include the power of sale.

Workouts, Restructuring, and Negotiated Settlements

Rather than resorting to expensive, time-consuming, and potentially risky insolvency proceedings, debtor-creditor disputes can often be successfully resolved on an informal, out-of-court basis. Our firm’s breadth of experience with commercial, corporate, and real estate law enables us to identify and implement timely, cost-effective strategies for workouts, restructuring, and other negotiated out-of-court transactions.


Attorney, Founding Member


Attorney, Founding Member


“The team at Stoll Petteys have been instrumental in providing best-in-class service for our growing company's wide range of legal needs.  Eric and Jeannie have an extraordinary drive for clarity and completeness – exactly what a technology business having the same drive needs in legal counsel."
John Carscadden, VP, Eagle Harbor Technologies
“Eric and David took over my case midstream and truly turned it around.  They resolved my case quickly, ending a long battle, and giving me back my business.”
Ed Huletz, NRBA Master Broker, Blue Dot Real Estate
"I've worked with Eric and David on a number of issues, including personal estate planning and various business matters.  Both of them are very good at making complicated subjects understandable and overall client service is excellent!"
Ryan Burt, Founder and Principal, Lars Marketing LLC