Originally from:
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Hardcover
Advising Minnesota Corporations and Other Business Organizations - 2nd Edition - Electronic
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CHAPTER 104
OPTIONS UNDER STATE LAW
FOR DISTRESSED COMPANIES
AND THEIR CREDITORS
Section
§ 104.01 Initial Considerations
§ 104.02 Workout
§ 104.03 Assignment for the Benefit of Creditors
§ 104.04 Corporate Receivership
§ 104.01 Initial Considerations
When considering the needs of a financially distressed business, the
federal Bankruptcy Code usually comes to mind. Chapter 11 of this Code
provides an operating business several protections not otherwise
available. In a Chapter 11 reorganization case, the ultimate goal is to
discharge as much debt as necessary and to restructure the remaining
debt to allow the debtor to carry on its business activities during and after
the bankruptcy. In addition to Chapter 11 bankruptcy, the business client
has several alternatives available under state law. Each of these options
should be explored before a decision is made to undertake a Chapter 11
bankruptcy proceeding.
Before exploring the alternatives to Chapter 11 bankruptcy, counsel
should obtain from the client a comprehensive listing of assets, liabilities,
revenues, and expenses. Counsel often can most effectively accomplish
this task by visiting the corporation’s place of business in order to assess
the business firsthand. It is essential to obtain from the client specific
information regarding assets and debt, including legal descriptions for
real property, vehicle identification numbers, serial numbers for other
business property, and registration numbers for patents, trademarks, and
other intellectual property. Counsel also should identify all current
holders of liens against corporate property, all pending or potential legal
and governmental actions against the corporation, and any other pertinent
matters affecting the assets of the corporation. This is absolutely
essential, because to the extent the litigation against the client involves
Roger J. Magnuson is a Partner at Dorsey and Whitney, LLP, where he serves as Head of the National Strategic Litigation Group and has practiced since 1973. He has been recognized as one of the top trial lawyers in the United States by major national and international publications, including Chambers International Guide to American Lawyers, which profiles the top 500 trial lawyers in the United States, Best Lawyers in America, Who's Who in American Law, and Who's Who in America. Mr. Magnuson was also recognized by a Journal of Law and Politics' survey for Judge's Choice "Wins Most Cases."
Some high profile cases that he has litigated include representation of the Florida Senate in the Bush v. Gore election controversy in 2000; and representation of the Plaintiffs in the widely publicized and studied Mall of America case. For several years he has represented, among other persons and entities, the Minnesota Twins and Major League Baseball principals and players in litigation; and has litigated national and local cases in federal and state court venues. He has appealed before the Supreme Court in a number of cases; as well as the Minnesota Supreme Court. He has authored several articles and 7 books.
Richard A. Saliterman is a Principal in Saliternan & Siefferman P.C., a full-service firm in Minneapolis established in 1976. Mr. Saliterman is a leading expert on corporate business matters, and is the author of several publications on business start-ups, franchises, and trademarks. Mr. Saliterman is the former National Judge Advocate for the U.S. Navy League, based in Washington D.C.
Contributing Editor:
Amanda Chang
Contributing Authors:
Alecia Anderson
Seth Back
John Baker
Shannon Berg
Constatin Burachek
Benjamin Carpenter
Ryan Check
Carl Christensen
Peter Fear
Michael Frasier
Aaron Hall
Catherine Hanson
Paul Harman
Amy Ithlan
Michael Kern
Chris Kuhlman
Brett Larson
Joshua Lederman
Karen Lundquist
James Magnuson
Jennifer Mead
Rao Menier
Heidi Miller
Rachael Moxon
Oliver Nelson
Scott Peitzer
Mitchell Skinner
Jonathan Stechmann
Lael Weinberger
Jonathan Wilson
Alex Zumbulyadis