Navigating Receiverships ABCs and Bankruptcy: A Comparative Analysis for Lenders and Creditors

Jaime B. Leggett | Bast Amron

Jaime Leggett practices in the areas of bankruptcy and complex commercial litigation. His experience includes investigating and prosecuting director and officer liability claims; representing trustees, creditors, equity holders, and debtors in bankruptcy proceedings along with assignees, creditors, and assignors in assignment for the benefit of creditors proceedings; federal and state court commercial litigation; and trials in federal, bankruptcy, and state courts nationwide.

Prior to joining the firm, Jaime worked for a firm in New York City, handling complex commercial and bankruptcy litigation. Previously to that firm, Jaime served as a law clerk to U.S. Bankruptcy Judge Allan Gropper of the Bankruptcy Court for the Southern District of New York and U.S. Bankruptcy Judge Arthur Weissbrodt of the Bankruptcy Court for the Northern District of California.

I. Understanding the legal framework of receiverships | 1:00pm – 2:00pm

• Explore the statutory basis for state court receiverships and the growing adoption of model receivership statutes
• Learn about the legal powers and duties of a receiver in managing distressed businesses
• Examine strategic advantages of receiverships
  • Discuss how receiverships provide protections similar to bankruptcy while offering additional benefits, such as lower costs and greater control for secured lenders
  • Analyze the ability of lenders to initiate receiverships without business owner consent and the strategic timing of such actions
• Compare receiverships and ABCs/bankruptcy
  • Compare the cost implications, control dynamics, and operational outcomes of receiverships versus bankruptcy or assignment for the benefit of creditor (“ABC”) proceedings
  • How receiverships can facilitate asset sales free and clear of lines, akin to bankruptcy sales
• Case studies and practical applications
  • Real-world case studies where receiverships have been successfully implemented as an alternative to bankruptcy

Break | 2:00pm – 2:10pm

II. Understanding the legal framework of ABCs | 2:10pm – 2:40pm

• Explore the statutory basis for state court ABCs and their common use in certain jurisdictions
• Learn about the legal powers and duties of an assignee in collecting and liquidating the assignment estate
• Examine strategic advantages of ABCs
  • Discuss how ABCs are similar to a Chapter 7 bankruptcy liquidation while offering additional benefits, such as lower costs and the ability to select the assignee
• Compare ABCs and bankruptcy/receiverships
  • Discuss how federal tax claims may render an ABC impractical given the ability of the IRS to short circuit the ABC process
  • Discuss how ABCs can facilitate a sale
  • Discuss how ABCs typically require less judicial involvement than a receivership or bankruptcy and can be more flexible
• Case studies and practical applications
  • Real-world case studies where ABCs have been successfully implemented as an alternative to bankruptcy
  • Discuss best practices for advising clients on whether to pursue a receivership, ABC, or bankruptcy

III. Receiverships/ABCs and third-party stakeholders: navigating creditor, debtor, and investor interests | 2:40pm – 3:10pm

• Understanding stakeholder roles: Explore the roles and rights of various stakeholders, including creditors, debtors, and investors, in a receivership/ABC process
• Managing conflicts and prioritizing claims: Discuss strategies for managing conflicts and prioritizing competing claims to maximize asset recovery
• Communication best practices: Learn effective communication strategies for keeping
  stakeholders informed and aligned during the receivership/ABC process