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Deal reached between secured lenders and indebted software developer

On Behalf of | Mar 21, 2015 | Chapter 11

If your business is having debt troubles and facing possible insolvency, then it is important to be aware of every debt relief option. While filing for bankruptcy is appropriate in many cases, debts can also be settled without going to court.

Every case is different, though, and a bankruptcy law attorney can analyze your specific debts and legal obligations to determine whether any of the following solutions are viable:

  • Negotiating debt
  • Restructuring debt
  • Renegotiating interest rates
  • Exchanging debt for equity
  • Pledging collateral
  • Restructuring security agreements
  • Dissolving the corporation in state court
  • ABC — statutory assignment for the benefit of creditors

If out-of-court solutions are not possible, then Chapter 11 or Chapter 7 bankruptcy may be the best option.

With these issues in mind, consider the recent bankruptcy filing for the closely held software developer Allen Systems Group Inc. (ASG). The Florida-based company filed a Chapter 11 petition in bankruptcy court in Delaware, claiming debts in excess of $666 million and assets of up to $500 million.

In a deal that allows for ASG’s debts to be restructured, the company’s senior secured lenders will now have a controlling interest in the company. According to ASG’s president, the Chapter 11 process is not expected to have much, if any, effect on business operations. The goal is to keep the doors open and make the company’s debt more serviceable.

The agreement with lenders is expected to result in a $420 million reduction in ASG’s long-term debt, while the remaining $240 million in debt is refinanced at a lower interest rate. The company is also expected to receive debtor-in-possession financing of $40 million in order to keep the business running during the Chapter 11 process.

If you have questions about resolving your own debt situation, then don’t hesitate to speak with a bankruptcy law attorney.