The Bankruptcy Code provides many powerful tools to maximize the value of a distressed customer’s assets and generate recoveries for creditors. However, financially distressed customers may decide not to file a bankruptcy petition for any number of reasons.
Customers may be deterred by the potential stigma caused by the public filing and other risks. An individual’s or company’s bankruptcy filing also exposes the debtor and “insiders” (such as a debtor’s owners, directors, officers, and other management) to scrutiny and potential liability for certain causes of action that a chapter 7 trustee, creditors’ committee, liquidating trustee, or other bankruptcy estate fiduciary can assert if the bankruptcy filing was preceded (or perhaps caused) by any misconduct.
Click here to view the full article