WORKING WITH FINANCIALLY DISTRESSED CUSTOMERS

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Western Hardwoods Association June 26, 2006 Las
Vegas, NV

• WORKING WITH FINANCIALLY DISTRESSED CUSTOMERS

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Jim Jensen, CCE, CEW

• International Business Credit Consulting
• National Association of Credit Management
• Oregon Distressed Business Services

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Qualifications

• CCE Certified Credit Manager
• CEW Certified Expert Witness
• B.S. Degree no surprise there!
• Advanced education - Dartmouth, Harvard, etc.
• THE MOST IMPORTANT IS

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Q B E

• The rest doesnt mean anything without this
• Weve all earned it or we wouldnt be here
• Cant be gained except through hard work

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• QUALIFIED
• BY
• EXPERIENCE!

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The Team

• List CEO and key management by name.
• Include previous accomplishments to show that
  these are people with a record of success.
• Summarize number of years of experience in this
  field.

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Mission Statement
The mission of the NACM Distressed Business
Services is to assist and facilitate in the
return to profitability of a business that is
experiencing temporary financial distress.  As a
member owned association of business credit
professionals, it is incumbent on us to use our
knowledge and expertise as best we can to work
with all parties in restructuring a company. In
those situations where it is not possible to
rehabilitate the company, it then becomes our
responsibility to assist in an orderly
liquidation of the business and its assets,
protecting the interests of both the secured and
unsecured creditor community..
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NACM OREGON SERVICES

• Credit Reports
• Industry Credit Groups
• Collections
• Education
• Distressed Business Services
• Accounts Receivable Analysis
• Credentia Staffing Services

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DISTRESSED BUSINESS SERVICES

• ASSIGNMENT FOR BENEFIT OF CREDITORS
• RESTRUCTURING
• APPRISALS, AUCTIONS AND LIQUIDATIONS
• ACCOUNTS RECEIVABLE ANALYSIS

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Distressed Business Services (continued)

• REPRESENT INDIVIDUAL CREDITOR ON UNSECURED
  CREDITORS COMMITTEES
• SECRETARIAL AND ADMINISTRATIVE SERVICES FOR
  CREDITORS COMMITTEES
• FACILITATE PREPACKAGED BANKRUPTCY
• ABILITY TO TALK WITH OTHER CREDIT PROFESSIONALS
  IN THEIR OWN LANGUAGE

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BANKRUPTCY ALTERNATIVES

• Extensions or Settlements
• General Assignment for Benefit of Creditors
• General Assignment for Benefit of Creditors

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EXTENSIONS OR SETTLEMENTS

• Functions like a Chapter 11 Reorganization
• Meeting of creditors is called
• UCC-1 executed to prevent run to courthouse
• Creditors committee formed, equitable plan
  formulated

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• Creditors vote on acceptance of workout plan
• Implement and fund plan, distribute pro-rata
  payments, close case
• Flexible speed, less cost, efficient
• Plan can be used as a reorganization plan in a
  pre-packed bankruptcy if a hostile creditor group
  attempts to stop the workout plan

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GENERAL ASSIGNMENT FOR BENEFIT OF CREDITORS

• Functions like a Chapter 7
• Disinterested 3rd party acts as fiduciary
• Assets sold, usually at auction
• Sales done for cash which speeds distribution
• All other assets converted to cash
• Distribute available funds pro-rata, close case
• Does not provide discharge of debts

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PREPACKAGED BANKRUPTCY

• WORK WITH MANAGEMENT AND COUNSEL IN THE
• INITIAL PROCESS (I.E. PREPARING AND MAILING
• OF NOTICES)
• FACILITATE THE ORGANIZATION OF THE
• CREDITORS COMMITTEE
• ASSIST IN NEGOTIATIONS BETWEEN CREDITORS
• AND DEBTORS
• ASSIST IN PREPERATION OF REORGANIZATION
• PLAN(S)

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CHAPTER 11 BANKRUPTCYReorganization

• Debtor in Possession
• Potential for survival
• Ability to make payments
• Settlement options
• Sale of business units
• Liquidation of assets
• No longer option for many small to medium sized
• business.

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CREDITORS COMMITTEES

• REPRESENTATION OF CREDITOR ON COMMITTEE
• SERVE AS COMMITTEE SECRETARY
• SERVE IN AN ADVISORY CAPACITY TO COMMITTEE
• MEMBERS
• ASSIST IN PREPARATION AND/OR REVIEW OF
• REORGANIZATION PLAN(S)
• SERVE AS AN EXPERT WITNESS ON PREFERENCE
• ISSUES

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General Assignment Liquidation

• 3rd party acts as fiduciary
• Sale of assets (auction)
• Cash sales speeds distribution

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Chapter 7Liquidation

• Sale Of Business
• Preference Actions
• Auctions
• Liquidations
• Ultimate discharge of all dischargeable debts

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