Why sell your claim?
The duration of a typical bankruptcy case may be as little as one to two years, but in many instances the process will drag on for much longer due to numerous case-related issues. If a claimholder is experiencing cash flow or liquidity concerns, it may be preferable to sell the claim and receive cash immediately. In addition, the ultimate consideration given at the end of a case may not be cash, but debt, equity, or some combination thereof.
What types of claims are there?
Bank lenders (secured creditors) and bondholders (general unsecured creditors) generally represent the largest portion of a debtor’s pre-petition claims (i.e. liabilities). But, at the time of a debtor’s filing, there is a large constituency of other creditors who also hold claims against the debtor at various levels of priority throughout the capital structure.
Creditors do not have to receive full payment for their prepetition debts (and typically do not). Under the Bankruptcy Code, there is a strict hierarchy of payment among claims of differing priorities, called the "absolute priority rule". In general, this principle states that claimholders with higher priority should receive 100% of their claim in full before a lower priority class receives any recovery on its claims.
What claims can I sell here?
Genereal Unsercured Trade Claims: Claims without a priority for payment and for which the creditor holds no security interest or collateral
Administrative Claims: Claims pursuant to Section 503(b)(9) of the U.S. Bankruptcy Code that provides administrative expense priority status
Unsecured Creditors’ Committee
Typically formed within 30 days of the bankruptcy petition filing, the UCC represents the interests of unsecured creditors. Its role is to review the Debtor’s operating results and to analyze the Debtors’ Plan for reasonableness and feasibility. The goal of the UCC is to maximize the dollar amount paid to all unsecured creditors from the bankruptcy estate.
How does the sale process work?
Click the Sell Claims button on the homepage and you will be taken to a transaction page. After completing the transaction form, you will receive a standard Transfer Agreement to be completed and signed electronically via Docusign. Within five business days after submission of a signed Transfer Agreement, you will receive a final price quote and you may choose to apporve the transaction or reject it.