Commercial Collections Blog

2007 Wrap Up

As we send out our last Coach’s Corner newsletter for 2007, I want to take a minute and thank each and every one of our clients for their continued trust in Burt & Associates. It with great pleasure and commitment that we serve you.

To everyone who recieves the Coach’s Corner, we look forward to 2008 with great anticipation for great things to come. Burt & Associates is ready to take on your accounts receivable management with over 100 years combined professional experience in the commercial collections industry. We are SAS70 Type II Certified and an Inc. 500 recognized company.

We wish everyone a safe New Year holiday and look forward to our continued professional relationship in 2008.

With warmest regards,

Jerry Curtis
President & CEO

Educational Tidbits For Today’s Credit Executive
A Hidden Threat to Secured Creditors In Section 552 of the U.S. Bankruptcy Code

Secured creditors generally embrace Section 552 of the U.S. Bankruptcy Code, which provides for an automatic severance of after-acquired property interests and the proceeds exception thereto. However, many secured creditors may be unaware of a hidden danger lurking in 552(b), the so-called equity exception. Section 552(b)’s equity exception has the potential to work a partial avoidance of an oversecured creditor’s property interests and thus diminish an otherwise healthy equity cushion for the creditor. This section is often ignored, but the provision can change the course of a bankruptcy reorganization in several ways. Further, despite the broad proceeds exception, 552(b) doesn’t provide an all-encompassing security interest preservation. Rather, one has to consider whether the property arising postpetition truly constitutes proceeds of encumbered prepetition property as well as whether the equity exception applies.

The Credit Manager’s Q&A Corner

QUESTION: Explain the schedule for payments to unsecured creditors by a debtor operating under Chapter 11.

ANSWER: Except in rare cases, debtors in Chapter 11 make no payments to unsecured creditors from the bankruptcy filing date until after confirmation of the reorganization plan. Typically, this period may extend for a year or eighteen months. Frequently, unsecured creditors don’t receive any payments for up to three years from the date of the bankruptcy filing. Also, an unsecured creditor’s claim does not accrue any interest during this period,

Related Posts:

• Financial and Accounts Receivables Services
• Help with Accounts Receivable Management
• SAS-70 Type II Certified Commercial Collection Agency
• Bankruptcies Will Cause Tighter Credit Terms
• Maintain Cash Flow