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Tere needs to be a period of very short, focused effort where the borrower and lender can negotiate key elements of the bankruptcy without the distraction of other parties. And what are those key elements? Tose discussions should center on how the borrower will finance its operations going forward and what sort of post-petition priming liens and other cash collateral protections will be given to the lender. Tose discussions also should focus on how the lender’s lien will be treated under the Chapter 11 plan. Tey also should consider any other major creditors


that could potentially object to the plan.


Ideally, you want to have a perfectly planned and perfectly orchestrated bankruptcy filing that results in a plan that is very quickly approved by the court. Te key to these fast and efficient bankruptcies is to methodically plan and prepare before the filing. Te reality of the matter is that if the borrower/debtor files a bankruptcy petition and simultaneously files a plan that has the backing of the secured lender, the likelihood of that plan ultimately being confirmed by the court is much higher.


I realize that what is being proposed here may sound like a radical idea, but it is a page from the playbook of several successful mega- bankruptcy proceedings involving hundreds of millions and even billions of dollars. Tere is no reason why those same concepts cannot be applied to a small business bankruptcy filing.


It also is important to note that this strategy may not work in all instances. Te lender may have an uncooperative borrower. Te lender also may have real issues with its borrower who may want to use the Chapter 11 proceeding to


cram down the bank’s loan or use the Bankruptcy Code avoidance powers against the bank. If that is the situation, then the bank should prepare for a contested bankruptcy proceeding. But if the lender has been attempting to maintain a good relationship with the borrower, that type of situation will hopefully be more of the exception than the norm.


Michael D. Fielding is a partner in  Blackwell LLP and represents clients dealing with troubled   bankruptcy by the American  michael.  or visit huschblackwell.com Blackwell is an MBA associate member.


THE MISSOURI BANKER 21


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