Conway MacKenzie provides Fiduciary Services in Chapter 11 bankruptcy and non-bankruptcy litigation in both state and federal courts. We serve as trustee or financial advisor both during a Chapter 11 case and in connection with post confirmation liquidation/litigation trusts. In non-bankruptcy situations, we are experienced in serving as receiver, as well as the assignee for assignment for the benefit of creditors.
While our approach is distinct depending on the facts and circumstances at hand, our broad goals in each Fiduciary Services engagement may include to marshal and secure assets, make objective assessments as to the viability of the entity (if operations are continuing) and the assets, and pursue strategies that maximize value for creditors and other stakeholders, while serving as a neutral arbiter for the court. In short, as a fiduciary, we seek to safeguard the value of assets in a fair, expeditious manner while investigations, claims, litigation and other issues can be resolved.
Extracting value from assets requires a strong financial, operational and accounting skill set, as well as hands-on experience advising and running businesses. As one of the leading financial and operational turnaround and restructuring firms in the country, Conway MacKenzie and its professionals, many who have been senior executives at companies in a wide range of industries, are well equipped for the task. We have extensive experience working with legal counsel with both bankruptcy and general litigation matters to help bridge the gap between the business situation and legal strategy. And through our significant experience serving successfully in a fiduciary role, we’ve become intimately familiar with the procedures and requirements of the process, including working closely with courts and counsel.
Our professionals, working individually or as a team, are capable of handling highly-complex matters when substantial assets are at stake with the potential for significant financial loss. Indeed, some challenges seem so daunting, intractable and irreversible that they are beyond resolution. While others may shy away from such challenges, we embrace them as part of our role as fiduciary.
Some of the services we provide in a fiduciary role include:
- Operating and managing businesses or properties
- Implementing management transitions
- Assessing value of assets
- Preparing initial monthly and final financial reports
- Preparing monthly accounting, including accounts receivable collections, payment of invoices and the preparation of financial statements
- Performing forensic accounting
- Reviewing and negotiating leases and contracts
- Developing asset marketing and disposition plans
- Winding down businesses
- Developing reorganization or liquidation plans
- Pursuing causes of action
- Preparing necessary financial and tax information
- Providing expert testimony
- Overseeing retained professionals
Conway MacKenzie serves as Chapter 11 trustee in corporate bankruptcy proceedings. In this role, the firm or one of its professionals assumes management and control of the bankruptcy estate from the debtor and serves as a fiduciary responsible for the parties of interest in the case. While many, if not most, Chapter 11 cases involve a “debtor in possession” that retains existing management to guide it through the process, in certain instances the appointment of a fiduciary is necessary.
The Bankruptcy Code empowers judges to appoint a Chapter 11 trustee under various circumstances, including “for cause,” which includes “fraud, dishonesty, incompetence or gross mismanagement of the affairs of the company by current management.” Additional grounds include when a fiduciary appointment would be in the best interests of creditors and other stakeholders, as well as when grounds exist to convert or dismiss a case.
When called upon under these circumstances, Conway MacKenzie’s experienced team is able to swiftly and successfully administer the estate, and maximize the value of assets by using sound business judgment, finance skills and technical and operational know-how based on the firm’s more than 25 years of experience.
We also have experience and expertise serving as Chapter 11 litigation or liquidation trustee. As litigation trustee, we work closely with counsel to oversee and manage causes of action such as preference, fraudulent transfer and other litigation claims, and to distribute recovered funds to creditors.
Finally, some Chapter 11 reorganization cases conclude with the confirmation of a liquidation or wind-down plan. In these instances, a liquidating trustee is often appointed to marshal and monetize the assets. Our team excels at efficiently and cost-effectively leading the wind-down of cases while maximizing returns for creditors and other stakeholders.
Financial disputes taken to state or federal court often result in the appointment of a receiver. A receiver is appointed to protect and enhance the value of the business pending the ultimate disposition of the controversy. Conway MacKenzie and its professionals have significant experience serving as receivers for businesses of all sizes and across many industries.
A key characteristic of a receivership is that it involves change in control without change in ownership. Receiverships, or non-judicial proceedings such as assignments for the benefits of creditors, are also a cost-effective and efficient alternative to bankruptcy.
Lenders frequently seek the appointment of a receiver – either through litigation or with the consent of a borrower – to protect its collateral. Most commercial loan agreements contain a clause providing for the appointment of a receiver in the event of a breach by the borrower. Conway MacKenzie frequently serves as receiver in cases where:
- The eventual sale or liquidation of the borrower and its assets is required
- The underlying business or management activities are alleged to be illegal or fraudulent
- The lender has lost faith in management’s competency in handling the current situation
- The lender has a non-performing loan which cannot be serviced by continuing the operation of the borrower
- The sale or liquidation of the borrower’s operations and assets are the best way to access and maximize the value of the lender’s collateral
- The lender is concerned with the continuing erosion of its collateral and the need to continue funding the borrower’s underlying operations
- There is a lack of credible financial information
- There are concerns over the physical loss of assets (cash, inventory, etc.) and/or the diminution of value of real property
As receiver, Conway MacKenzie is able to address these and other concerns while serving as a neutral court arbiter. In accordance with the order of appointment, which outlines the scope and extent of the receiver’s powers and duties, Conway MacKenzie performs a number of functions, including dealing with customers and suppliers, negotiating and settling claims, marshaling and monetizing assets, and restoring financial and accounting integrity to the business.
Conway MacKenzie serves as the liquidating trustee where a liquidating trust has been established under a confirmed plan of reorganization in Chapter 11. Pursuant to the bankruptcy code, a liquidating trust can be formed to liquidate assets, prosecute avoidance actions and other causes of action, administer and enforce claims, and disburse funds to creditors who are the beneficiaries of the trust.
Conway MacKenzie also serves as liquidation trustee, member of the board of directors, or an independent fiduciary in matters where there is an out-of-court liquidation or wind-down plan. In addition, Conway MacKenzie also serves as a fund manager of a fund where certain assets are not easily liquidated, or where a holding of the fund needs to be wound down and dissolved. In these instances, our team excels at efficiently and cost-effectively leading the wind-down of cases while maximizing returns for creditors and other stakeholders.