Involuntary bankruptcy (Score 3)

If you are checking with licensed local counsel regarding your options, be sure to inquire about an involuntary bankruptcy case. That's right. Under 11 U.S.C. 303 there are certain situations in which creditors have the right to place a business into either Chapter 7 or Chapter 11 against its will. Now one of those requirements is that you have three or more entities meeting certain criteria (303(b)(1)). As you have described the situation, you and the other affiliates seem to be at least three different creditors, all of whom have substantial debts. The details, pros and cons should be discussed at length with your counsel, i.e. pro: a United States Trustee will administer assets and pay debts. Con: the debts may be paid pennies on the dollar if at all, depending on assets. Nevertheless, the bare possibility of an involuntary bankruptcy may alter the bargaining positions of the company. They may decide that they can be a tad more generous even if it is only so they can squirrel away more assets before they finally collapse.