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Strategic Alternatives for Distressed Businesses, 2010 Edition
More information about Strategic Alternatives for Distressed Businesses:
The latest edition of West’s reference book, detailing distressed businesses, bankruptcy law, and analysis of practice, features a chapter authored by Traxi’s Steven A. San Filippo. In “The First 30 Days of an ABC” Steve offers practical advice on the first steps of setting up an ABC; applicable to the distressed company, creditors, the assignee, and other interested parties. Distressed companies selecting an assignee will find this information particularly valuable as a checklist of the steps needed, and an evaluation of the accomplishments that should be achieved with each step in the process.
Chapter 9
The First 30 Days of an ABCContributed by Steven A. San Filippo of Traxi, LLC.
§ 9:1 Preassignment diligence
§ 9:2 The first 30 days: An overview
§ 9:3 Engaging legal counsel
§ 9:4 Documenting the inventory of assets and liabilities
§ 9:5 Arranging for the relevant appraisals
§ 9:6 Considering different alternatives
§ 9:7 Dealing with creditors and related issues
Scope
This chapter briefy describes a number of critical steps that will need to be taken by the assignee during the first 30 days of an assignment for the benefit of creditors, providing a framework to maximize value for creditors.
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§ 9:1 Preassignment diligence
Before accepting the assignment, it is important for the assignee to evaluate the debtor and assess the situation. Issues for the assignee to consider include the accuracy and completeness of the information provided, which will be used to document the inventory of assets and liabilities, as well as an analysis of viability, liquidity, and prospects for recovery of value under various potential scenarios. If real estate assets are involved, the assignee must properly research potential environmental issues and related concerns as well as ensure the completion of any appropriate environmental studies; this information will allow the assignee to gain a full understanding of the risks involved. In addition, the assignee must not accept any assignment until all required approvals and licenses are obtained. In weighing available alternatives, the assignee will need to refer to applicable state law, with specific requirements varying from state to state. In addition, the assignee needs to ensure that a lien search is conducted. If there are properly perfected liens on the debtor's assets, the assignee is well advised to obtain an agreement with the secured lender(s) before accepting the assignment.
§ 9:2 The first 30 days: An overview
Within the first 30 days, the main steps for the assignee to take are to engage legal counsel, document the inventory of assets and liabilities, arrange for relevant appraisals, consider alternative strategies, and deal with creditor related issues. Above all, the assignee for the benefit of creditors (assignee) will need to quickly establish a comprehensive plan and work diligently in the earliest stages of the case to maximize recoveries to creditors.
§ 9:3 Engaging legal counsel
Engaging legal counsel may be prudent (or necessary), depending on a number of factors. These factors include (but are not limited to) where the ABC is to take place and the complexity of the situation. Upon accepting the assignment, the assignee should review (or have counsel review) all asserted security interests and liens to determine whether all purportedly secured creditors have valid, perfected security interest(s) in the assets.
§ 9:4 Documenting the inventory of assets and liabilities
Documenting the inventory of assets and liabilities early in the assignment is critical to properly administer an ABC. At the time that the assignment is made, the assignor should turn over to the assignee all of the debtor's books and records, including a complete listing of its assets and liabilities as of the date of the assignment, and a list of all creditors, their addresses, and the indebtedness owed to each. In states where ABCs are court-administered, the assignee…
More information about Strategic Alternatives for Distressed Businesses:
This desk reference provides a thorough overview of the alternatives to bankruptcy available to a distressed business and its various creditors and other constituents. Volume 1 includes chapters describing these alternative processes and 18 state-specific chapters written by practitioners from each state that focus on common practices and procedures that need to be considered when using these alternative approaches. A compilation of selected federal statutes and statutes from all 50 states in volume 2 concludes the work. This publication is useful when more than one venue is available.
Features
- Provides a general overview of alternatives to bankruptcy available to a business
- Supplies the pertinent text of state and federal statutes for guidance in determining venue and other considerations
- Provides state-by-state practice guides that cover such states as California, Colorado, Connecticut, Delaware, Florida, Illinois, Michigan, and Missouri
- Includes selected federal and state statutes related to assignments for the benefit of creditors and other alternatives
- Includes 18 state-by-state chapters that explain the most commonly used alternatives to bankruptcy in a standardized format
- Offers a detailed analysis by expert practitioners of procedures for the state in which they practice