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Letter to the Editor

Web posted and Copyright © December 1, 2000, American Bankruptcy Institute.

n the September 2000 issue of the ABI Journal, two articles addressed "dot.com" failures.

Both Robert Gebhard and Dr. Carl Steidtmann focused on traditional bankruptcy methods of maximizing value, including asset sales (of domain names, intellectual property, customer lists, etc.). But there are other alternatives for realizing the value that remains in these distressed ventures. Asset sales, even on an accelerated basis in bankruptcy, still require significant dollars for professionals and time—the enemy of both the distressed business and buyer. If the assets cannot be acquired quickly, much of the value is lost.

Professionals advising these businesses need to review all the alternatives to effect the transfer of the remaining value. This should include state law alternatives, including bulk sales (in those states where bulk-sales laws still exist), secured lender foreclosure, negotiated sales with some form of creditor composition on an out-of-court basis and even general assignments for the benefit of creditors. Also requiring attention is the need to carefully review licenses and other contract rights, where recent decisions can affect the saleability of assets. Not every alternative will be the best alternative for all cases, and sometimes chapter 11 or chapter 7 will be the better way to sell assets.

The practical reality is that most high-tech start-up ventures will in fact fail. Those that survive will be the result of better management, better financing and support of the buying public.

Geoffrey L. Berman

Development Specialists Inc., Los Angeles



 

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