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Practical and entertaining education for
attorneys, accountants, business owners and
executives, and investors.

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Thank You To Our Sponsors

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Disclaimer
The material in this webinar is for informational purposes only. It should not be considered
legal, financial or other professional advice. You should consult with an attorney or other
appropriate professional to determine what may be best for your individual needs. While
Financial Poise™ takes reasonable steps to ensure that information it publishes is accurate,
Financial Poise™ makes no guaranty in this regard.
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Meet the Faculty
MODERATOR:
Thad Wilson - King & Spalding LLP
PANELISTS:
Jonathan Friedland - Sugar Felsenthal Grais & Helsinger LLP
Jonathan Carson - Stretto
Shanté George - Baker Tilly Virchow Krause, LLP
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About This Webinar – Help, My Business is in
Trouble!
When a business becomes financially troubled, the business owner often experiences denial,
paralysis, or both. Lenders commonly lose confidence and then trust in the business, as
communications tend to break down, deadlines are missed, and promises are broken. Small
business owners commonly have issued personal guarantees, so business failure can often
lead to personal financial stress. The good news is the business and business owner usually
has some options, and even some leverage. This webinar explains what a business owner
should- and should not- consider and do when dealing with financial trouble. Specific topics
include discussion of bankruptcy (Chapters 7 and 11); assignments for the benefit of
creditors; and friendly foreclosures. This webinar provides the business owner and her
advisors with an overview of various restructuring and liquidation methods, a framework for
how to decide between them, and practical tips for traversing the difficult environment that is
financial distress.
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About This Series – Restructuring, Insolvency &
Troubled Companies
Companies fail all the time, for all sorts of reasons. Some companies become distressed, or even
insolvent, because of mismanagement; others because of fraud; others for myriad other reasons- some
intrinsic to the company and some extrinsic. Regardless of the cause, failing or failed companies create a
unique set of issues, risks, and even opportunities for all involved. This area of law and finance has
become so specialized that no fewer than five (American Bankruptcy Institute; Association of Insolvency
& Restructuring Advisors; Commercial Law League of America; National Association of Federal Equity
Receivers; Turnaround Management Association) national organizations exist to help those who
specialize in the field to stay up to date on the latest developments, strategies, and tactics in the area.
Each Financial Poise Webinar is delivered in Plain English, understandable to investors, business owners, and
executives without much background in these areas, yet is of primary value to attorneys, accountants, and other
seasoned professionals. Each episode brings you into engaging, sometimes humorous, conversations designed to
entertain as it teaches. Each episode in the series is designed to be viewed independently of the other episodes so that
participants will enhance their knowledge of this area whether they attend one, some, or all episodes.
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Episodes in this Series
#1: Help, My Business is In Trouble!
Premiere date: 8/19/20
#2: Opportunity Amidst Crisis- Buying Distressed Assets, Claims, and Securities for
Fun & Profit
Premiere date: 9/16/20
#3: Bad Debtor Owes Me Money!
Premiere date: 10/14/20
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Episode #1
Help, My Business is In Trouble!
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Strategic Alternatives for Distressed Businesses
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Strategic Alternatives Against Distressed Businesses
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Factors Affecting a Decision
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Key Considerations Driving Strategy
 Senior secured creditors’ desired path
 Potential buyer’s desired path
 Presence of personal guaranties
 Whether customers care about company’s financial problems
 Status of company’s relationship to key vendors
 Whether any vendors are irreplaceable as supply sources
 Competition level of company’s industry
 Broader industry trends, particularly in commodity-based industries
 Whether entities affiliated/related to company are not troubled
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Additional Key Considerations Driving Strategy
 Secured debt
 Real property leases
 Contracts
 Union liabilities
 Environmental liabilities
 Pending litigation
 Prior transactions and related limitations periods
 Government bailouts and restrictions
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Constituencies to Consider
 Equity sponsor / Shareholders
 Secured lenders
 Vendors
 Customers
 Landlords
 Asset purchaser / Competitors
 Government
 Unions / Employees
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Fiduciary Duties
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Fiduciary Duties: Gheewalla
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A Buyer’s Perspective
 Buyers like to buy cheap & want to avoid risk. But when dealing with troubled
companies:
 Some options are cheaper but carry higher risk
 Some carry lower risk but are more expensive
• Buyers generally do not like the prospect of an open auction, which is mandated by the
bankruptcy process
• Third-party buyers are wary of credit bidding by secured lenders, so support from
secured lender is usually critical to a successful process
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A Buyer’s Perspective
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What Risks?

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Chapter 11 Bankruptcy Filings
 US Bankruptcy Code: Title 11 of the United States Code
 Basics of Chapter 11:
 Petition filed with bankruptcy court (voluntarily or involuntarily)
 The debtor, as “debtor-in-possession,” acts as trustee of the business (a “debtor”)
 Fixed priority order for creditor distributions
 Automatic stay of creditor actions to collect debts
 Ability to seek debtor-in-possession (“DIP”) financing
 Ability to reject certain executory contracts & leases
 Recognized sale process allowing buyers to buy “free and clear” of liens, claims
and encumbrances
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Chapter 11 Advantages
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Chapter 11 Disadvantages
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Assignments for Benefit of Creditors (“ABCs”)
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Assignments for Benefit of Creditors (“ABCs”)
 ABC is a state law remedy, so form of ABC will vary depending on laws of relevant
jurisdiction
 Statutory vs. Common Law ABCs
 States may adopt statutes to govern ABCs (e.g., California, Delaware, New York)
 State law sets specific requirements Assignee must follow (e.g., claims bar
dates for creditors, form of notice of ABC to creditors, etc.)
 Others may have no statutory framework, but case law exists to govern ABCs
(“Common Law” ABC) (e.g., Illinois)
 Under common law ABC, Assignment is simply a contract between debtor to
transfers title, custody, and control of property to Assignee for
sale/liquidation
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ABC Advantages
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ABC Disadvantages
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Creditor Composition / Composition Agreements
 Sometimes referred to as “Compositions,” “Creditor Compositions,” or out-of-court
chapter 11s
 Composition Agreement is a contract between a debtor and its creditors
 Participating creditors agree to accept payments specified under agreement in full
satisfaction of their claims against debtor
 Appropriate where business is only capable of reorganizing by a reduction in overall
debt, and creditor body is unified or small enough to make negotiating feasible
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Creditor Composition Advantages
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Creditor Composition Disadvantages
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Workouts
 May be difficult to obtain consent of nearly all creditors as required for a composition, so
company may opt to seek concessions solely from financial creditors (bank, equipment
lessors, bondholders, etc.)
 Workout Agreement restructures debt of a particular creditor (e.g., secured loan)
or tranche of creditors (e.g., notes or bonds)
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Workouts Advantages
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Workouts Disadvantages
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“Naked” Sale by Debtor
 Debtor sells assets, generally to secured lender or 3rd party (potentially its own
shareholders) with consent of secured lender.
 Advantages:
 Quick and relatively inexpensive method of liquidating a business
 May also serve as a quick method for the sale of a company as a going concern
 Disadvantages:
 Requires consent of all lienholders
 Treatment of, and impact on, unsecured creditors
 Possibility of being deemed a fraudulent/voidable transfer
 Breach of fiduciary duty concerns for board of directors of debtor
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Article 9 Sales
 Fast & inexpensive way to sell secured creditor’s collateral
 Uniform Commercial Code (“UCC”) permits secured party to take possession of its
collateral &, without removing collateral from the debtor’s premises, dispose of it
 Sale must be “commercially reasonable”
 Secured party may purchase the collateral at public sale but not at private sale unless
the collateral has a public market where price can be readily ascertained
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Article 9 Sales
 Secured party must notify debtor, any other guarantors or obligors, & other junior
secured parties
 When rules are followed, all of debtor’s rights in collateral are transferred to buyer and
subordinate security interests are discharged.
 Good faith purchaser for value takes title free and clear even when secured party fails to
strictly comply with statutes
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Article 9 Sales
 Process basics:
 Notice of Default and Acceleration of Debt provided by secured party to debtor
and guarantors
 Voluntary Repossession Agreement, Replevin Lawsuit or “Self Help”
Repossession (no trespass or breach of peace such as use of physical force or
threats; replevin bonds)
 10-day UCC Notice of Private or Public Foreclosure Sale and Affidavit of Mailing
provided by secured party to each debtor, guarantors, & lienholders identified
from current UCC and tax lien search & potential interested purchasers
 Special procedures for tax liens (e.g. federal tax liens require 25-day notice)
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Article 9 Sales
 Additional documentation needed:
 Proof of Advertising of UCC foreclosure sale in local newspaper or other relevant
publication (including online)
 Power of Attorney from secured party for bidding at UCC public sale
 Script of UCC Public Foreclosure Sale or audio/video recording of sale
 Bill of Sale from secured party to purchaser
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About the Faculty
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About The Faculty
Thad Wilson - ThadWilson@KSLAW.com
Thad Wilson is a Partner in the Atlanta office of King & Spalding LLP and a member of its
Financial Restructuring Practice Group. Ranked by Chambers USA 2020 as a “Rising Star”
in Bankruptcy, Thad represents a broad spectrum of clients in financial restructuring,
corporate and insolvency matters, including debtors, secured and unsecured creditors, and
other parties in interest in major Chapter 11 bankruptcy cases. He has extensive experience
representing clients in insolvency-related litigation and disputes. Thad is a member of the
American Bankruptcy Institute, the Turnaround Management Association (currently a board
member of its Atlanta chapter), and the State Bar of Georgia. In 2014, Thad was elected to
the initial class of Barristers of the W. Homer Drake, Jr. Georgia Bankruptcy American Inn of
Court, of which he is currently a member.
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About The Faculty
Jonathan Friedland - jfriedland@sfgh.com
Jonathan Friedland, a senior partner with Sugar Felsenthal Grais & Helsinger, LLP, views his
job simply: to make money for clients whenever possible and to protect their interests at every
turn. Licensed in four states, Jonathan’s transactional work focuses on representing private
funds and other owners of private businesses, and the businesses they own. He regularly
advises on M&A activities, structuring new ventures and restructuring old ones, and on other
commercial relationships. Jonathan is rated AV® Preeminent™ by Martindale-Hubbell, 10/10
by AVVO, and enjoys several other similar distinctions. Jonathan graduated from the State
University of New York at Albany, magna cum laude (in three years) and from the University
of Pennsylvania Law School. He clerked for a federal judge before entering private practice
and served for several years as an Adjunct Professor of Strategic Management at the
University of Chicago’s Graduate School of Business. Jonathan is lead author and editor of
several significant treatises, several chapters in other treatises, and scores of articles on law
and business.
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About The Faculty
Jonathan Carson - jonathan.carson@stretto.com
Jonathan serves as Chief Executive Officer of Stretto, leading the charge in outlining
go-to market strategies and tactics geared toward company growth. As co-founder of
Kurtzman Carson Consultants LLC, Jonathan is recognized as a trailblazer in the
bankruptcy industry. With more than 20 years of bankruptcy experience, Jonathan
leads the Executive Management Team’s efforts to drive market-share growth, and
successfully enter new business lines in furthering Stretto’s overall market strategy as
a leader in bankruptcy services and technology. Working together to identify, target
and pursue various industry sectors, Jonathan instructs this talented group across
departments on best practices for increasing market share and solidifying Stretto’s
position as a leading provider of bankruptcy administration services.
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About The Faculty
Shanté George - shante.george@bakertilly.com
Shanté George has consulting experience in the areas of bankruptcy, financial and
operational restructuring, transactional due diligence and forensic investigations. She
has extensive experience advising companies, unsecured creditors, trustees and
examiners in both bankruptcy and out-of-court proceedings. She leads large
engagement teams in analyzing liquidity and stabilizing cash flow, preparing and
critiquing business plans, assessing feasibility issues, and conducting claims
analyses. Shante also regularly conducts complex forensic and financial analyses
relating to the evaluation of potential causes of action, asset misappropriation and
cash tracing, earnings manipulation, and other forensic accounting matters
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Questions or Comments?
If you have any questions about this webinar that you did not get to ask during the live
premiere, or if you are watching this webinar On Demand, please do not hesitate to email us
at info@financialpoise.com with any questions or comments you may have. Please include
the name of the webinar in your email and we will do our best to provide a timely response.
IMPORTANT NOTE: The material in this presentation is for general educational purposes
only. It has been prepared primarily for attorneys and accountants for use in the pursuit of
their continuing legal education and continuing professional education.
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ABOUT DailyDAC
DailyDAC.com is the leading source of
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About Financial Poise
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