An out of court, non-bankruptcy workout requires coordination of a team effort. At Goldstein Bershad & Fried, PC, we have long term working relationships with the appraisers, auctioneers, liquidators, and purchasers who are necessary to make a workout work. It's fast, efficient and less expensive and more flexible than chapter 11, while accomplishing the same objectives.
An out of court workout is a settlement with all creditors and usually involves a mass mailing of one or more of the following: an accounting of the assets and liabilities, a description of the distribution (how much each creditor will get), a Proof of Claim form, and a check tied to a release of all claims, or an explanation that all money went to pay secured claims and/ or taxes.
Much of the success of an out of court workout depends on creditors being treated equally and fairly.
The debtor keeps more control over the liquidation than in a formal bankruptcy where a Trustee has the control. This allows the debtor more flexibility to make adjustments as may be expedient to suit the needs of the debtor as well as the creditors.
Creditors usually get their distribution much sooner than in a formal chapter 7 bankruptcy. Depending on the complexity, a liquidation and distribution can be accomplished within months of closing the doors, rather than years as is typical of bankruptcy.