Unlike other firms, FactorLaw does not automatically recommend bankruptcy as the only available option to our clients. We believe that it should be the last option when all other alternatives have been explored and rejected as unsuitable. This is because bankruptcy can sometimes be disruptive, unpredictable and more expensive than other alternatives. Thus, our Chicago bankruptcy attorneys spend time to learn about our clients’ specific needs and issues and try to determine the best strategy for resolving them.
We also frequently help our clients buy or sell financially distressed businesses or real property through Section 363 auctions, Assignments for the Benefit of Creditors, foreclosure sales and private transactions.
The options for financially distressed businesses depend primarily upon whether the business is viable and funds exist for a restructuring, or whether the financial or operational difficulties are intractable and make a restructuring not feasible.
For businesses that are not good candidates for a restructuring and instead need to be wound down, there are also several options. They include, among other things, a common-law Assignment for the Benefit of Creditors, a Chapter 7 case, a liquidating Chapter 11 case, or a state law dissolution proceeding.
The Assignment for the Benefit of Creditors (“ABC”) is a common-law process in Illinois and a statutory process in other states. Generally speaking, under Illinois law, a company that wishes to liquidate through an ABC selects a trustee/assignee to liquidate the business. The company then assigns all of its assets to the trustee/assignee, who liquidates the assets in accordance with the priority scheme typically used under the Bankruptcy Code. Often the trustee/assignee will operate the business during the liquidation process in order to maximize value and to effectuate a going concern sale.