In hard times, many middle market companies utter the same mantra: “I can’t afford to file for bankruptcy.” The good news is that there are many lesser used but effective methods available outside of bankruptcy court to help liquidate or restructure a business.
Using a state law assignment for the benefit of creditors or foreclosure allows a quick liquidation without the high administrative costs of bankruptcy. Liquidating through a trust mortgage allows an orderly process, thereby avoiding the “race to the courthouse,” and maximizes the recovery to all creditors. Alternatively, if a middle market company seeks to reorganize, a composition agreement or a traditional out-of-court restructuring may be a frugal alternative to a full-blown Chapter 11 proceeding.
