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Sales of trade claims: the rewards and the risks.(CREDIT COLUMN)(chapter 11 bankruptcy filing rules)

Business Credit

| May 01, 2006 | Nathan, Bruce S. | COPYRIGHT 2006 National Association of Credit Management. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

A dreaded event in the life of any credit executive is the bankruptcy filing by a customer that has significant indebtedness to the credit executive's company. While a debtor's Chapter 11 might offer the promise of continued business, the creditor is still left with an unsecured claim of uncertain collectability. The likelihood of a quick and significant cash distribution on this claim is quite remote indeed.

In more and more bankruptcy cases, credit executives have the option of selling their unsecured claims. The sale facilitates an early cash payment for the claim ;and eliminates the risk of a delayed and less favorable--and possibly no--recovery.

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Source: HighBeam Research, Sales of trade claims: the rewards and the risks.(CREDIT...

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