David Dragich Article on Alternatives to Chapter 11 Featured on CFO.com

The COVID-19 pandemic has wrought havoc on the economy, and the worst is yet to come. There has been a marked increase in Chapter 11 bankruptcy filings across a number of sectors, with retail and energy being among the hardest hit. However, Chapter 11, which can be a slow and expensive process, and involves lots of oversight, is not always the right option.

In a recent article published by CFO.com, David Dragich discusses some alternatives to Chapter 11, including assignments for the benefit of creditors, receiverships, and out-of-court workouts.

Assignment for the Benefit of Creditors

In many states, an assignment for the benefit of creditors (“ABC”) can be an effective Chapter 11 alternative. From lower cost to a faster, more flexible process, ABC proceedings provide many advantages relative to Chapter 11 bankruptcy.

Federal or State Court Receivership

A federal or state court receivership involves the court appointment of a neutral and independent third party receiver to oversee and, in most cases, operate or liquidate a business. A receivership can be an effective option to deal with lender and other creditor claims in an organized fashion when funds are not available to pursue a bankruptcy proceeding.

Out-of-Court Workout

To the extent a troubled company has a viable business to build upon, and relatively good relationships with its creditors, an out-of-court workout can be a viable option.

Click here to read the full article on CFO.com.