Exploring Options for Liquidation and Reorganization: Strategy Meeting Document Checklist
BY: Niket Pandya, MAZURKRAEMER BUSINESS Summer Law Clerk, 2023
If a business faces is facing financial distress and may be unable to meet its obligations, timely exploring all options for bankruptcy or non-bankruptcy liquidation or reorganization becomes crucial. Chapter 11 bankruptcy, whether under Subchapter 5 or not, offers businesses an opportunity to restructure debts and operations. An orderly out-of-bankruptcy liquidation can provide ownership a means to wind down the business and distribute assets to creditors. In order to assess the best option file for a business and its owners, several key documents and information are required to navigate the process effectively. This series will provide an overview of our firm’s intake process and discuss our comprehensive approach to addressing your financial situation. First, let’s go through the documents we will need to discuss at the initial strategy meeting.
Document Checklist:
1. Detail of All Assets: Provide a comprehensive list of assets, including their addresses, approximate liquidation values, owners’ names, and percentage ownership.
2. Detail of All Liabilities: Prepare a detailed breakdown of liabilities, including the names and addresses of creditors, debt inception dates, co-borrowers (if any), approximate amounts owed, account numbers, terms, guarantors, and collateral securing the debt.
3. Tax Details: Gather all relevant tax information, including the amount owed, tax periods, types of tax, copies of installment agreements (if any), and notices received.
4. Credit Card Debts: Compile a list of credit card debts, including the names of credit card companies, outstanding balances, and any other pertinent details.
5. Loans with Banks and Others: Gather copies of loan documents for loans obtained from banks and other lenders. Include details such as loan terms, lien positions, and any agreements with insiders.
6. Trade Debts: List all outstanding debts owed to suppliers for goods or services provided.
7. Outstanding Wages: Provide information regarding any outstanding wages owed to employees.
8. Other Debts: Include details of any additional debts not covered in the above categories.
9. Accounts Payable: Provide a detailed breakdown of accounts payable, specifying the amounts owed to various creditors.
10. Accounts Receivable: Detail any outstanding amounts owed to your business by clients or customers.
11. Marketing Materials: Include links to any relevant marketing materials that provide insight into your business’s operations and potential value.
12. Outstanding Contracts: List and include copies of any outstanding contracts, such as leases or other agreements.
13. Transfers Made During Last Years: Disclose any significant transfers made during the final years of business operations exceeding $5,000.
14. Professionals Involved: Provide the names and addresses of the accountant, bookkeeper, and any other professionals associated with the business.
15. Litigation Description: Describe any ongoing litigation involving the business and include copies of relevant pleadings.
16. Liens and UCC Filings: Detail any liens filed against the debtor’s property and provide information on all Uniform Commercial Code (UCC) filings.
17. Insurance Details: Provide a comprehensive overview of all applicable insurance policies that could impact the bankruptcy proceedings.
18. Tax Returns: Include the year-to-date (YTD) and the two prior year’s tax returns for the business.
19. Financial Statements: Provide whatever financial statements are available, including the Statement of Operations (Income Statement), Balance Sheet, and Cash Flow Statement.
20. Rent, Utilities, and Other Expenses: Gather information on rental agreements, utility statements, addresses, deposits held, balances owed, and projections for ongoing expenses.
In addition to initially requesting this information, we email to clients this Business Bankruptcy Questionnaire. It is a comprehensive document that requests all information we would need if we had to file a Chapter 7 or Chapter 11 bankruptcy for the business. A second blog post on this questionnaire will follow.
Please consult with a qualified bankruptcy attorney prior to making any material business or legal decision.
You can reach Salene Kraemer, of our firm’s Restructuring Practice: Salene@mazurkraemer.com. 412.427.7075.
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