Bankruptcy Alternatives, Debt Workout and ABCLawyer

 

Alternatives to Bankruptcy

Many businesses, when facing crushing debt, believe that a Chapter 11 Restructuring is the only option to to deal with their situation.  At times it can be the best or only option; however, there are options that you may be able to take advantage of that better fit your specific situation, be it reorganization or an orderly liquidation.
Debt Workout is an out-of-court process that enables a company to restructure its debts with its creditors.  In the Chapter 11 process, Bankruptcy Courts have broad discretion to deny the discharge of debts in the reorganization process, and less than 20 percent of companies who enter into Chapter 11 proceedings are successful
Restructurings and Debt Workouts may help you regain liquidity and profitability, and in fact, many creditors are agreeable to out-of-court restructuring as they would rather help their customers return to health as this often ensures a greater percentage of their debts being paid.
An ABC or Assignment for the Benefit of Creditors is a Florida Statutory procedure. It is similar, but not identical to a Chapter 7 bankruptcy.
In these court proceedings, once the Assignor assigns the assets to an Assignee, the Assignee must liquidate the assets by public auction or private sale and the Assignee may continue operating the business to maximize a return.
Creditors are given notice of the ABC's filing and creditors have 120 days to file claims. Once the assets are liquidated, claims are analyzed and distribution is made according to statutory priority with the Assignee and his professionals costs usually paid first as a cost of administration. All actions taken by the Assignee are on notice to all creditors. When the estate has been administered, the Assignee, files for fees and expenses for himself and his professionals and files his final report.

Factors to consider whether ABC is appropriate.

For ABC

1. Voluntary proceeding - you choose your Assignee.
2. Speed of proceeding - deposition and sale within 30 days; claims within 120 days; cases can be closed within 6 months, if no litigation. No U.S. Trustee or creditors' committee; minimal court hearings.
3. Costs - usually considerably lower; Assignee and his professionals paid from assets, but must have assets in the estate.
4. Operation of business during notice; can sell business as a going concern, finish work in process and collect accounts receivable, but only on a going forward cash flow positive basis.
5. Maximization of Assets - help to guarantors and responsible parties for tax debts; your client usually meets with Assignee before proceeding is filed; business plan for liquidation usually in place. Usually results in a larger payout to creditors when assets exist.
6. Ability to sell assets to third parties or even to principals on notice with clean, new funds.
7. Assignor's counsel can get reasonable fee up front.
8. No statutory preference actions.

Against ABC

1. Doesn't work if there are no assets.
2. Need cooperation of secured creditors or assumption of secured debt upon a sale.
3. No statutory equivalent of a "free and clear sale".
4. No stay of litigation.
5. No national injunction; only injunction over proceeding against assets assigned to the Assignee.
6. No statutory preference claim.
7. No ability to reorganize by cram down or consensual plans.
8. No provision to stretch out tax debt.
9. If goal is to sell business assets to a new entity, you can be outbid by a competitor.

Make no mistake – Chapter 11 may be your best option – but it pays to identify alternatives. An attorney with an understanding of both state and federal bankruptcy laws, hands-on experience in business operations and creditor negotiation experience can help you

Why Sidney Turner

• We are experienced in representing creditors like banks, financial institutions and commercial lenders in creditor’s rights issues. As such, we understand creditors and their mindsets when it comes to working with their clients’ pre- and post-bankruptcy. This gives us a strong advantage when negotiating for a win-win solution that is acceptable to all parties. Remember – just because you may want to settle your debts in a plan that is beneficial to you, this doesn’t mean your creditors do. We are prepared to provide powerful representation to financial institutions, commercial landlords, investors and other parties to help you avoid bankruptcy.
• As a firm with more than 30 years of experience in Bankruptcy and Debt Restructuring, along with strong experience in startup and established businesses, we understand your needs and those of your business. We are able to provide practical guidance to help you protect or save your business.

You’ve worked hard building your business. Seek pragmatic advice to keep your business and protect yourself. Call attorney Sidney Turner at 561.208.6368.

 

Sidney Turner – Legal Insight, Business Strategy

Sidney Turner LLC is Business and Corporate Lawyer who specializes in Structuring the Setting up or Restructuring of Companies, Buying and Selling of LLC Companies as well as creating Contracts and Agreements for Companies. He also offers legal services for Chapter 11 Bankruptcy, Business Restructuring, and Debt Workouts to corporations, small businesses and startups across South Florida including the Boca Raton, Coral Springs, Deerfield Beach, Ft. Lauderdale, Margate, Tamarac, Davie, Hollywood, Port St Lucie, Palm Beach County , Broward County and New York State.