COVID-19 and Business Distress
Our firm specializes in bankruptcy and debt restructuring for businesses of all types. We have decades of experience and success guiding economically distressed businesses through difficult times, including bankruptcy filings, out-of-court restructurings, corporate and real estate workouts, lease renegotiations and restructurings, and loan covenant and margin call analysis.
Assignment for Benefit of Creditors
An assignment for the benefit of creditors, commonly referred to as an “ABC, is a state law insolvency proceeding that is often a quicker and less expensive alternative to a chapter 7 liquidation. In an ABC, the debtor transfers all of its property at the time of the assignment to an assignee. In a role similar to that of a trustee in bankruptcy, the assignee accepts the assets of the debtor, liquidates them, and distributes the proceeds to creditors. Whether your business and its creditors is better served with a chapter 7 petition or an ABC is something we can evaluate and advise you on.
Law firms for debtors, creditors’ committees and trustees, particularly in large chapter 11 cases, often confront conflicts that prevent them from taking positions that are adverse to certain parties in the case. Typically, this happens when there is an existing professional relationship between the firm and the adverse party. The solution to this problem is to hire a firm without a conflict – “conflicts counsel” – to represent the debtor, committee or trustee for the limited purpose of handling the dispute with the adverse party. The selection of conflicts counsel is critical because if the conflicts counsel does properly handle the matter it will reflect poorly on the conflicted firm that chose them. Our skill and experience in handling challenging and complex matters and delivering desired results, coupled with our own minimal conflicts due to our small size, makes us especially qualified to serve as conflicts counsel.
An especially useful option is a recent amendment to the Bankruptcy Code that greatly simplifies and reduces the expense of Chapter 11 reorganization for businesses with debts of less than $7.5 million. To explore all of this and other options for your business, please contact Jeffrey Rich at 646.453.7852, [email protected], Robert Michaelson at 646.453.7853, [email protected] or Howard Magaliff at 646.453.7854, [email protected].