Last Rights Liquidating a Company

by Branch, Ben; Ray, Hugh; Russell, Robin

• ISBN13: 9780195306989
• ISBN10: 0195306988
• Format: Hardcover
• Copyright: 2007-02-01
• Publisher: Oxford University Press

Summary

This book deals with the end-game for a business. No business entity lasts forever and anyone faced with the task of liquidating a business at the end of its run needs to know that a liquidation doesn't present an insurmountable problem. In fact, substantial value is often overlooked. This book explains the various options for liquidations and the pros and cons for each possibility. The book also can be used as a clear how-to guide for someone who wishes to undertake the job of a liquidator or trustee. From start to finish, the book lays out the steps and pitfalls in liquidations.

Author Biography

Dr. Ben S. Branch has been a professor of Finance at the University of Massachusetts since 1975. He has had a major role in three large bankruptcy/liquidations: First Republic Bank (Chairman of the Senior Creditors Committee and Chairman of the Board of the Liquidating Corporation); Bank of New England Corporation (Chapter 7 Trustee); VFBLLC (Manager of the liquidations corporation for Vlasic Funds). He has also written extensively on the area of bankruptcy and financial distress.
Hugh M. Ray has practiced restructuring, bankruptcy, and insolvency law for nearly four decades and has helped draft and shape bankruptcy legislation on a number of occasions during those years. He has co-written two prior books on creditors' rights and bankruptcy liquidations and is a frequent lecturer at the National Conference of Bankruptcy Judges, as well as former chair or the American Bar Association's Business Bankruptcy Committee.
Robin Russell has practiced law at Andrews Kurth LLP since 1987. As a partner in their bankruptcy section she combines a depth of experience in both bankruptcy litigation and bankruptcy transactional work. She has represented corporate debtors, liquidating trustees, bondholders, unsecured creditors' committees, bank groups, landlords, trade creditors, and bidders for estate assets in Chapter 7 and 11 bankruptcy proceedings. She has authored numerous publications on creditors' rights and financial transactions and frequently lectures on these topics.

Table of Contents

The Basics of Liquidation	p. 3
The General Liquidation Environment	p. 5
An Overview of Liquidation under the Bankruptcy Code	p. 6
Liquidation outside Bankruptcy	p. 8
The Liquidator	p. 8
Managing the Players in the Liquidation Process	p. 9
What Is There to Liquidate?	p. 13
Conclusion	p. 14
Chapter 7 Liquidations	p. 15
The Chapter 7 Trustee	p. 15
Duties of a Trustee	p. 16
Operating the Debtor's Business	p. 21
Compensation of a Chapter 7 Trustee	p. 24
Conclusion	p. 25
Liquidating in Chapter 11	p. 26
The Road to a Chapter 11 Liquidating Plan	p. 26
Why Liquidate under a Chapter 11 Plan?	p. 29
The Estate Representative as Liquidator	p. 30
Funding the Liquidating Trust	p. 37
Compensation of the Liquidator under a Liquidating Plan	p. 38
Duties of the Liquidator under a Liquidating Plan	p. 38
Powers of the Liquidator under a Liquidating Plan	p. 41
Continued Bankruptcy Court Supervision of Liquidation	p. 43
Conclusion	p. 46
A Tale of Two Liquidations: Case Studies in Chapter 7 and Chapter 11	p. 47
Friede Goldman Halter Inc.	p. 47
The Friede Crisis	p. 50
The Friede Bankruptcy Filing	p. 51
The Marketing of Assets	p. 54
The Liquidating Plan	p. 60
Bank of New England Corporation	p. 62
Conclusion	p. 66
Employee Issues	p. 67
Retention of Employees	p. 68
Termination of Employees	p. 70
Dealing with Unions and Collective-Bargaining Agreements	p. 74
Benefit Plans	p. 75
Workers' Compensation Insurance	p. 90
Conclusion	p. 90
Day-to-Day Management	p. 92
Office Space and Staff	p. 92
The Debtor's Records	p. 93
The Liquidator's Records	p. 93
Accounting Issues	p. 94
Intercompany Issues	p. 103
Employment and Supervision of Professionals	p. 103
Leases and Executory Contracts: Assets or Liabilities?	p. 104
Conclusion	p. 105
Locating and Disposing of Assets	p. 106
Locating Assets	p. 106
Evaluating the Assets	p. 107
Sale of Assets	p. 111
Abandonment of Assets	p. 125
Tax Considerations	p. 129
Conclusion	p. 130
Pursuing Litigation	p. 131
Investigation	p. 132
Statutes of Limitations	p. 132
Forum Selection	p. 134
Avoidance Actions	p. 135
Other Causes of Action	p. 137
Fee Arrangements	p. 143
Economic Assessment	p. 145
Managing the Ongoing Litigation	p. 154
Conclusion	p. 162
Claims and Distributions	p. 163
Absolute Priority under the Bankruptcy Code	p. 163
The Role of the Liquidator	p. 164
Investigation of Claims	p. 164
Claim Objections	p. 165
Strategy for Reducing or Eliminating Claims	p. 167
Subordination of Claims	p. 170
Distribution Mechanics	p. 172
Substantive Consolidation	p. 174
Conclusion	p. 177
Receiverships and Assignments for the Benefits of Creditors	p. 179
State Court Receiverships	p. 179
Federal Equity Receiverships	p. 182
Assignment for Benefit of Creditors	p. 184
State Avoidance Laws	p. 188
Conclusion	p. 189
Closing Down	p. 190
Record Retention	p. 190
Dissolution of Business Entities	p. 194
Final Reports	p. 196
Conclusion	p. 197
Guidelines for Employment and Supervision of Professionals	p. 199
Investment Guidelines for Chapter 7 and Chapter 11 Trustees	p. 203
Asset Category Definitions	p. 208
Internal Control Guidelines	p. 213
Discounted Cash-Flow Valuation	p. 220
Evaluation of Preference Payment Claims	p. 223
Litigation Net-Present-Value Exercise	p. 230
Calculating the Impact of Subordination on Distributions	p. 234
State-by-State Dissolution Requirements	p. 238
Asset Purchase Agreement	p. 240
State-by-State Receivership and Assignment for the Benefit of Creditors Laws	p. 257
Document Retention Policy	p. 260
Distribution Letter and Questionnaire	p. 263
Index	p. 267
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