Two ways of handling insolvent or financially distressed business debtors are to either keep the debtor in business and restore the business to profitability, or to put the debtor out of business, realize the assets and distribute the proceeds among the creditors. This learning module will present information which will help the credit professional become familiar with both of these methods and their advantages and disadvantages, in order to participate effectively if a customer becomes insolvent. Topics covered include Identifying the Distressed Debtor, Voluntary Settlements, Methods of Resolution, Assignment for the Benefit of Creditors and Evaluating Settlement Offers. After successful completion of this learning module the student should understand how to identify a financially distressed debtor, what is involved in a voluntary settlement of claims, the different kinds of settlement plans, the two types of assignments for the benefit of creditors, the different methods of resolution and how to evaluate settlement offers.
Robert S. Bernstein is managing partner of Bernstein Law Firm, P.C. He serves as counsel to commercial landlords, equipment lessors, bankruptcy trustees, creditors' committees, creditors, and reorganizing businesses in proceedings throughout Pennsylvania and the Middle Atlantic States, concentrating in the many facets of bankruptcy and commercial law. Mr. Bernstein writes and lectures for local and national groups on matters of collection, bankruptcy, business law, and professional ethics and, for more than ten years, has been certified as both a creditors' rights and business bankruptcy specialist by the American Board of Certification. Mr. Bernstein earned a BA from the University of Pittsburgh in 1976 and a J.D. from Duquesne University in1981.