Business Estates Bureau:

Services Available to Businesses in Financial Difficulty

The Business Estates Bureau of BCMS has served the business and credit interests of the community since 1906. The Bureau provides services in connection with the reorganization of every type and size of business, in both out-of-court arrangements and in Chapter 11 bankruptcy cases.

Meeting of Creditors: When management of the debtor business agrees to convene meeting of its creditors, the Bureau is provided with a comprehensive list of creditors. The Bureau invites all known creditors to the meeting. The Bureau urges management to bring to the meeting copies of current, comprehensive financial information to enable those in attendance to understand the financial condition of the business and its prospects for rehabilitation.

Out-of-Court Arrangements: The Bureau helps supervise the affairs of businesses in financial difficulty, to rehabilitate when possible and to liquidate when necessary, in an economical, timely and businesslike manner. The Bureau works closely with an elected creditors’ committee in administering each case.

Compromise Settlements: A compromise settlement is an arrangement in which creditors agree to accept less than the total amount of their claims in full settlement of the debt. The settlement must be fair (in an amount equal to or, preferably, greater than creditors could expect to receive under a liquidation of the business) and must also be offered without discrimination to all creditors of the same class. The funds for the settlement usually come from a third party. Such an approach can provide early cash to creditors and allow a distressed business to continue to serve its customers and employees. To ensure equitable recovery by all creditors, funds for the settlement are deposited in special trust funds with and distributed by the Business Estates Bureau, to ensure equitable recovery by all creditors.

Extension Agreements: Some business may not have the ability to generate sufficient cash to settle with creditors, but the business may be able to become rehabilitated and repay creditors over a period of time from funds generated by continuing operations. The key to success in this type of case is an extension of time granted the company within which to repay creditors. The terms and conditions of extension programs are negotiated between the business and a creditors’ committee, with the assistance of the Bureau. Once an agreement is reached, the Bureau provides a written report detailing the debtor’s proposal to all creditors for their review and consent. During the extension period, regular payments are received by the Bureau and deposited in special trust funds for periodic distribution to all unsecured creditors on a pro-rata basis. The Bureau works with the creditors’ committee in monitoring the debtor’s operations and keeps creditors informed, by way of written reports, of the status of the debtor’s operations and its compliance with the terms and conditions of the extension agreement.

General Assignments for the Benefit of Creditors: Some businesses cannot continue to operate and must, therefore, be closed and their assets liquidated. As a method of concluding the affairs of a business, the general assignment is faster and more economical than bankruptcy for the creditors of the debtor business. Occasionally, the Bureau, as assignee, will operate the business for a short period of time in order to complete work in process or to attempt to sell the business as a going concern. The Bureau holds the funds generated from the liquidation, in trust, pending verification and satisfaction of secured claims and identification and payment of statutory priorities, after which remaining funds are distributed to creditors on a pro rata basis.

Chapter 11 Bankruptcy: The Bureau works closely with debtors and creditors involved in Chapter 11 reorganizations. The Bureau serves as secretary to the official Chapter 11 creditors’ committee and as the designated disbursing agent under plans of reorganization. The Bureau provides special services to the Association’s membership with respect to filing claims with the Bankruptcy Court. The Bureau can also provide written status reports regarding ongoing bankruptcy cases for a modest fee.

Adjustment Bureau Staff: The Bureau is staffed by full time, experienced, bonded personnel. The Bureau provides an inexpensive and efficient method of providing for the rehabilitation or liquidation of insolvent businesses. Full accountability for funds received and disbursed under out-of-court arrangements and Chapter 11 Bankruptcies are made periodically to the appropriate parties.

If you like further information please contact us at (210) 225-7106.