What options does a middle-market company struggling to pay its debts have for relief? Three of the most popular are the out-of-court workout, reorganization and liquidation.

Out-of-Court Workout

The simplest and cheapest option for a struggling mid-sized company that wants to remain in business is to consensually work out debts directly with its creditors. The key word here is consensual. Without reaching an agreement, a debtor company has no ability to force a creditor to take less than it is owed, or to accept payment on terms different from the contractual obligations, outside of a court proceeding. But with agreement, the solutions are limited only by the creativity of the company and its advisers.