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New strategy takes aim at business bankruptcy administration costs

There are many viable options for diverse New York businesses seeking to overcome troublingly high debt levels, including Chapter 11 bankruptcy in select instances.

Although that avenue for resolving material debt challenges will not uniformly make optimal sense for all corporate debtors, a Chapter 11 filing can certainly comprise a strong debt-challenge strategy in a given case.

Our deep legal team of experienced Manhattan business attorneys at Rich Michaelson Magaliff Moser, LLP works on a daily basis with commercial clients exploring ways to best resolve significant debt-related issues.

In doing so, we note that, "The laws concerning debtor protection, creditors' rights and related issues are complex and evolving."

That reality was squarely underscored recently by suggested adjustments from U.S. Trustee Program officials tasked with overseeing bankruptcy administration for Chapter 11 filers.

As reported in a national news report on adjustments to quarterly fees for some Chapter 11 debtors, regulators are proposing that the currently existing scheme providing for quarterly disbursements from filers pegged to flat-rate payments be changed to a percentage-of-disbursements policy.

What federal officials are seeking is a greater infusion of money from filers collectively to be applied to program oversight. If the present recommendation on raised fees is adopted, it will reportedly bring in about $140 million more in revenue in 2018 than is expected to be received from filers this year.

Not all Chapter 11 filers are slated to be affected. Notably, only the largest debtors would see a sizable per-quarter increase in fees. The above-cited report notes that fees for some debtors (think truly large filing entities here) could spike by an eight-fold amount.

Still, as stressed by industry commentators, most filers will remain unaffected and, even for those who might suffer some adjustment, a spike in fees is highly unlikely to deter their decision to pursue a Chapter 11 resolution.

"I've never heard someone talking about these fees as a meaningful part of their calculation in thinking about bankruptcy," says one report contributor.

Indeed, costs -- while obviously being of importance in every business context -- are but one of myriad factors considered by business principals examining debt-solution options.

Proven attorneys with a demonstrated record of assisting clients with commercial bankruptcy and other debt-relief options can provide candid and knowledgeable guidance regarding strategies to employ to deal purposefully with material debt challenges.

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