A Chapter 11 bankruptcy puts you, the Creditor, in a difficult financial position. You invested time and capital, provided products and/or services of great value to the Debtor, and you’ve delivered on your end in a timely manner. Now you have been backed into a corner, and face an accumulation of unpaid bills and overdue invoices that you can’t collect on. Filing a claim with the bankruptcy court appears to be your last resort to recover your losses.
After filing a Proof of Claim in a bankruptcy case, most Creditors are left wondering how long they will have to wait for a positive outcome on their claim from the court's decisions. Although each Chapter 11 bankruptcy case is unique, proceedings can take years before conclusion. That's a long time to wait.
Filing a Claim may be a Creditor’s first action taken after the Debtor files bankruptcy, but it’s certainly not the last. Knowing that a Claim can be sold gives the Creditor control of the outcome. It opens up an opportunity for Creditor recovery that is not dependent on the court's proceedings and timeline.
Here are 5 Reasons you should consider to sell your bankruptcy claim:
1. Don't Wait
Even if you have already filed a Bankruptcy Claim, it is likely that you still have much longer to wait for the Debtor’s Plan of Reorganization to be confirmed by the court, and for payments to be subsequently approved and issued under the Plan. It is not uncommon for creditors to wait several years to recover amounts owed to them.
On the contrary, taking the step to sell your Bankruptcy Claim is your decision and will be based on your own timing. Without the dependency on court-approved restructuring or payment plans, you can recover your losses sooner.
2. Get Back to Normal (Faster)
When faced with the unforeseen circumstances of a Chapter 11 Bankruptcy case, your main concern is to recover the amount owed as soon as possible, in order to use the payments to maintain your business operations, compensate your employees and pay your bills. Time is not on your side.
When selling your Bankruptcy Claim, the biggest hurdle to recovering your loss is to find a buyer. Once a buyer is found and an agreement is in place, it can take minutes—not months—to recover your loss and receive timely payment in exchange for your claim.
3. It's Easy
Similar to listing an item to sell on eBay, listing your Bankruptcy Claim to be sold is a simple process that can now be done completely online. For a process that was historically conducted with pen, paper, fax, and mail, modern digitization has vastly simplified the complexity of monetizing bankruptcy claims.
4. It's Safe
Since the 1978 enactment of the US Bankruptcy Code, the world of bankruptcy claims trading has existed and its processes have been tried and true. When a claim is sold through the XCLAIM marketplace, Creditors can rest assured that the transaction will be executed safely, transferred legally, and protected contractually by signed agreements.
The option to sell your bankruptcy claims online has become popular due to a number of factors. A claims trading market provides greater access to Buyers and increases competition for claims. Moreover, the digital technologies underpinning marketplace platforms allow for enhanced security measures to apply to the rapid processing of these complex transactions.
5. It's Free
As a Creditor, there is no cost to selling your claim with XCLAIM. The Buyer pays all transaction fees.
Keep in mind, however, that in any transaction, there may be a need for retaining legal counsel to review your documents. This is a potential cost that Creditors can opt for when selling a claim. Comparatively, it is still much more cost-efficient than hiring a bankruptcy attorney to represent your rights and interests in the debtor’s bankruptcy case.
The Bottom Line...
Selling your bankruptcy claim is a legitimate, safe, and simple alternative to waiting indefinitely. At XCLAIM, we want to help you get paid on your own timeline and your own terms. This is the driving force behind why we've built the world's largest bankruptcy claims marketplace platform for claims trading; to help Creditors connect with interested Buyers and quickly recover lost revenue.