Law schools everywhere are playing Superman and flying in to protect those smaller investors who are losing big. Filing claims against their brokers, although their losses don’t justify paying for a lawyer, the little guys still need help. For some, losing anywhere from $3,000 to $25,000 is no big deal but when you don’t have much…it matters!

The clinics that defend small investors began in New York with funding from former Attorney General Eliot Spitzer. According to Gary Pieples, director of the Consumer Law Clinic at Syracuse University College of Law, he [Spitzer] donated money which generated from fines levied against Wall Street execs. And following in New York’s footsteps are California, Illinois and Pennsylvania.

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As major financial corporations are crumbling down, multimillion-dollar companies seeking bankruptcy protection can’t secure funding. They are also losing pledged money to save their operations resulting in liquidations and thousands of job losses.

“It is not just the consumer that is running low on cash, but major financial institutions are running short on cash and are having trouble borrowing to cover their loan commitments,” said Peter J. Gurfein, a restructuring specialist in Akin Gump Strauss Hauer & Feld’s Los Angeles office.

According to Gurfein, “the heart of the problem for companies trying to emerge from bankruptcy is lack of funding to pay for it, or withdrawal of previously committed funds.”

Filing a Chapter 11 bankruptcy means that the company has the ability to put off existing debts while attempting to raise capital and restructure their business in order to remain above water. However, as reported in The National Law Journal, “failure to keep up with payments in bankruptcy, or find money to exit as a viable business, may prompt what’s called a Section 363 liquidation sale, or even a conversion to a Chapter 7 liquidation for the sale of assets.”

“A lack of funding to assist troubled businesses through a tough economy is widespread,” said Victor G. Milione, head of the restructuring practice in the Boston office of Nixon Peabody. “We’re seeing it across all segments of the revenue stream for our clients as well as companies not our clients, from midcap to large-capital companies and those publicly traded.”

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