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WORKING WITH FINANCIALLY DISTRESSED CUSTOMERS

Western Hardwoods Association June 26, 2006 Las Vegas, NV. WORKING WITH FINANCIALLY DISTRESSED CUSTOMERS. Jim Jensen, CCE, CEW. International Business Credit Consulting National Association of Credit Management Oregon – Distressed Business Services. Qualifications.

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WORKING WITH FINANCIALLY DISTRESSED CUSTOMERS

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  1. Western Hardwoods Association June 26, 2006 Las Vegas, NV WORKING WITH FINANCIALLY DISTRESSED CUSTOMERS

  2. Jim Jensen, CCE, CEW International Business Credit Consulting National Association of Credit Management Oregon – Distressed Business Services

  3. Qualifications • CCE – Certified Credit Manager • CEW – Certified Expert Witness • B.S. Degree – no surprise there! • Advanced education - Dartmouth, Harvard, etc. THE MOST IMPORTANT IS

  4. Q B E • The rest doesn’t mean anything without this • We’ve all earned it or we wouldn’t be here • Can’t be gained except through hard work

  5. QUALIFIED BY EXPERIENCE!

  6. The Team • List CEO and key management by name. • Include previous accomplishments to show that these are people with a record of success. • Summarize number of years of experience in this field.

  7. Mission Statement The mission of the NACM Distressed Business Services is to assist and facilitate in the return to profitability of a business that is experiencing temporary financial distress.  As a member owned association of business credit professionals, it is incumbent on us to use our knowledge and expertise as best we can to work with all parties in restructuring a company. In those situations where it is not possible to rehabilitate the company, it then becomes our responsibility to assist in an orderly liquidation of the business and its assets, protecting the interests of both the secured and unsecured creditor community..

  8. NACM OREGON SERVICES • Credit Reports • Industry Credit Groups • Collections • Education • Distressed Business Services • Accounts Receivable Analysis • Credentia Staffing Services

  9. DISTRESSED BUSINESS SERVICES • ASSIGNMENT FOR BENEFIT OF CREDITORS • RESTRUCTURING • APPRISALS, AUCTIONS AND LIQUIDATIONS • ACCOUNTS RECEIVABLE ANALYSIS

  10. Distressed Business Services (continued) • REPRESENT INDIVIDUAL CREDITOR ON UNSECURED CREDITORS COMMITTEES • SECRETARIAL AND ADMINISTRATIVE SERVICES FOR CREDITORS COMMITTEES • FACILITATE PREPACKAGED BANKRUPTCY • ABILITY TO TALK WITH OTHER CREDIT PROFESSIONALS IN THEIR “OWN” LANGUAGE

  11. BANKRUPTCY ALTERNATIVES • Extensions or Settlements • General Assignment for Benefit of Creditors • General Assignment for Benefit of Creditors

  12. EXTENSIONS OR SETTLEMENTS • Functions like a Chapter 11 Reorganization • Meeting of creditors is called • UCC-1 executed to prevent run to courthouse • Creditor’s committee formed, equitable plan formulated

  13. Creditor’s vote on acceptance of workout plan • Implement and fund plan, distribute pro-rata payments, close case • Flexible = speed, less cost, efficient • Plan can be used as a reorganization plan in a pre-packed bankruptcy if a hostile creditor group attempts to stop the workout plan

  14. GENERAL ASSIGNMENT FOR BENEFIT OF CREDITORS • Functions like a Chapter 7 • Disinterested 3rd party acts as fiduciary • Assets sold, usually at auction • Sales done for cash which speeds distribution • All other assets converted to cash • Distribute available funds pro-rata, close case • Does not provide discharge of debts

  15. PREPACKAGED BANKRUPTCY WORK WITH MANAGEMENT AND COUNSEL IN THE INITIAL PROCESS (I.E. PREPARING AND MAILING OF NOTICES) FACILITATE THE ORGANIZATION OF THE CREDITORS COMMITTEE ASSIST IN NEGOTIATIONS BETWEEN CREDITORS AND DEBTORS ASSIST IN PREPERATION OF REORGANIZATION PLAN(S)

  16. CHAPTER 11 BANKRUPTCYReorganization Debtor in Possession • Potential for survival • Ability to make payments • Settlement options Sale of business units Liquidation of assets No longer option for many small to medium sized business.’

  17. CREDITORS COMMITTEES REPRESENTATION OF CREDITOR ON COMMITTEE SERVE AS COMMITTEE SECRETARY SERVE IN AN ADVISORY CAPACITY TO COMMITTEE MEMBERS ASSIST IN PREPARATION AND/OR REVIEW OF REORGANIZATION PLAN(S) SERVE AS AN EXPERT WITNESS ON PREFERENCE ISSUES

  18. General Assignment Liquidation • 3rd party acts as fiduciary • Sale of assets (auction) • Cash sales – speeds distribution

  19. Chapter 7Liquidation Sale Of Business Preference Actions Auctions Liquidations Ultimate discharge of all dischargeable debts

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