Bradford Capital (Bradford) is an investment firm that purchases claims from creditors who are owed money from companies in bankruptcy. We have over a dozen years of experience in purchasing hundreds of claims of all shapes and sizes in wide variety of bankruptcy cases.
Why doesn't the debtor pay me?
Following the filing of a Chapter 11 petition, the bankruptcy code protects the debtor with an “automatic stay” against creditor actions. The automatic stay provides a period of time in which all judgments, collection activities, foreclosures, and repossessions of property are suspended and may not be pursued by the creditors on any debt or claim that came about before the filing of the bankruptcy petition. All creditors are essentially frozen in their pre-petition position. The automatic stay is designed to provide the debtor with time to investigate and formulate a plan of reorganization, negotiate the plan with creditors and solicit votes, and complete the restructuring. In addition to the pre-petition creditors, there could also be many executory contracts that are rejected that result in damages which also have to go through the same reconciliation process before being paid anything.
What are the benefits of selling my bankruptcy claim?
Immediate Cash Conversion: The average duration of a corporate bankruptcy case is approximately 2 years from the bankruptcy filing date to the plan effective date, but many cases take far longer due to litigation, disputes between creditors, negotiating asset sales and contract assumptions and rejections. If you are experiencing cash flow or liquidity concerns, or just don’t want to wait it out, selling your non-performing claim for cash eliminates the time risk associated with a bankruptcy case and allows you to immediately re-invest the proceeds back into your business.
Elimination of Recovery Risk: Unsecured creditors are positioned just above equity holders and are the last creditors in line to receive distributions. In many cases, recoveries are low or non-existent for unsecured claims after administrative expenses (lawyer and advisor fees) and secured creditors are paid. Selling your claim for cash allows you to secure a definitive recovery, eliminating the risk of an uncertain bankruptcy outcome.
Elimination of Consideration Risk: Assuming there is sufficient value remaining at the conclusion of a bankruptcy case, unsecured creditors may receive distributions of cash, stock or bonds, or a combination thereof. Notes and stock are difficult and costly to liquidate and often cannot be sold immediately. Selling your claim for a cash payment from Bradford will eliminate the risk of receiving illiquid securities. Elimination of Time and Cost associated with the Bankruptcy Process: Corporate bankruptcy cases involve a great deal of paperwork and correspondence between the debtor, the bankruptcy court and creditors. Selling your claim for cash eliminates the time, money and valuable human resources required to follow and participate in a bankruptcy case from beginning to end. Potential Tax Benefit: Selling may provide your company with a tax benefit by applying the loss on the uncollected portion of your receivable against current Income. Please consult with a tax professional for advice on your specific situation.
When will Bradford pay me?
The entire process from first contact to receiving your funds can be completed within a few days, and our assignment provides for payment within 5 business days of receipt of the executed transfer documents. Payment is normally made via wire transfer, but a check can also be issued.
What if I choose not to sell my bankruptcy claim?
A creditor is certainly not obligated to sell their claim. The Chapter 11 filing precludes the debtor from paying obligations, including obligations to many of its vendors and suppliers, incurred before the date that it filed for bankruptcy protection. Invoices for these obligations are now considered pre-petition claims and will be dealt with through the bankruptcy process. Bradford is a fund specialized in buying claims from creditors in bankruptcy situations and we have the ability to spread our risk over Bradford’s overall portfolio of claim investments.
How does Bradford determine its offer price?
Timing and recovery estimates are oftentimes highly speculative. Bradford analyzes the prospects of the amount and type of recovery based on the priority status of a claim. It could be that there is zero recovery for one class and 100% recovery for another class, or oftentimes, somewhere in between. There are potential for receiving illiquid stock or notes as all or part of the recovery. Additionally, our pricing anticipates the expected timing of distributions to creditors in a case, which more often than not, is longer rather than shorter.
What information is available so that I can evaluate Bradford's offer?
Bankruptcy court filings are available to the public for review and evaluation. You can call the court, contact debtor’s counsel, unsecured creditor’s counsel, etc. to request documents and information in the bankruptcy case.
If the distribution that Bradford receives from the debtor is less than the purchase price that Bradford paid me, will Bradford demand a refund ?
No, Bradford accepts the risk that the recovery amount is less than what we pay you for your claim. Bradford is only entitled to a refund if the face amount of the claim you sold us is reduced, impaired or expunged by the bankruptcy court or for breach of certain representations as detailed in a claim assignment agreement. Bradford takes on the full risk of ultimate recovery and timing of such recovery for the claims we purchase.
What information does Bradford require to evaluate a claim ?
Bradford requires that you have a valid claim that has not been previously sold, objected to, or satisfied. We recommend that you check your records carefully prior to accepting our offer. Bradford reserves the right to review the validity of any claim and may refuse to purchase your claim for any reason.
What are the schedules, proof of claim, omnibus objections, & stipulations?
At some point after the bankruptcy filing, the debtor will file their schedules of assets and liabilities. In that document, they will list the amounts that they have on their books and records and being owed to their various creditors. Sometimes, the debtor will indicate if the amounts are contingent, unliquidated or disputed (“CUD”). The debtor will set up a bar date for creditors to file claims in the case. If the creditor’s claim is not listed in the schedules of assets and liabilities, or if it is lists as CUD, or in a different amount than what is on the creditor’s books and records, then a creditor should file a proof of claim. At some point, the debtor may object to a claim for a variety of reasons and a creditor may respond or not to the objection. Similarly, the debtor may allow the claim through the process of a stipulation or settlement agreement with the creditor. There are many moving parts that have to come together until the final allowance and payment of a creditor’s claim.
It depends on the circumstances of your claim and the case itself. Bradford can assist with determining the status and help with any filings that are necessary.
What else do we have to do to transfer our claim to Bradford?
Once Bradford receives the executed assignment and transfer documentation, Bradford will file the notice of transfer of claim form with the bankruptcy court and no further action to transfer the claim will be required on your part. Once the claim is transferred, Bradford will stand in your shoes to receive court notices and distributions ultimately made in the case.
Is Bradford affiliated with or hired by the debtor? Is Bradford affiliated with the bankruptcy court?
No. Bradford is an independent investment firm and is not related in any way to the debtor or the bankruptcy court.
In which bankruptcy cases is Bradford buying claims today?
Bradford purchases claims in a number of bankruptcy cases. Please call or email for specific details
If I decide to sell, what should I do next?
Please fill out our bid request form, call, or email us. We’re glad to assist you with questions you may have… even if you decide not to sell!