BANKRUPTCY LAW

Analyze the situation in order to determine the feasibility of staying out of bankruptcy. What’s the problem? What caused it? How big is it? Will it result in a default that is uncontrollable? Who’s in the creditor body? Are they secured or unsecured? What’s the litigation status? What’s the liquidity status? Are there sufficient funds to stay in business while being restructured?
Work with financial advisers to create a model of how the crisis will be dealt with.
Try to persuade creditors to “just stand still” and not pursue immediate payback.
Negotiate with creditors and try convincing them that the problem is best solved out of bankruptcy.
If negotiations are successful, work out payment plans for each creditor.
If not successful, Bankruptcy Declaration

Initiate a Chapter 11 case to pursue restructuring within the protective provisions of the Bankruptcy Code (usually known as ‘filing for Chapter 11’).
Prevent stigmatization of employees and business operations. Create a detailed communication plan to include regulators, shareholders, employees, vendors and clients.
Secure financing. “Without liquidity to pay the bills, all is for naught,”
Once liquidity is secured, work with the management team and financial advisers to decide what’s core and non-core to the business. Establish the company’s new vision.
Build creditor consensus around the chosen exit strategy. This can be a lengthy process and require delicate negotiations.
If creditors think they are being economically harmed, there could be extensive litigation.
Document and effectuate the eventual agreement.

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