This is a foreclosure not BK question:
Background. NO preferencial payments.
ABC Co. is public, insolvent, debt 10x its market cap. Very few assets. In breach in nearly every agreement, including to secureds. No claims of fraud. Revenue has dried up for many reasons. Restructure is mandatory. Most debt 3-5 years old.
Debt: Secured#1 (for years and has made new loans): 40% of debt, 5-10% stock)
Secured #2(for years and still making loans): 20% of debt, 50% of stock -- does not need #1's votes).
accrued unpaid salary 10%
IRS etc 4%
36% judgments, vendors
If secured lender (s) forclose on assets, assuming proper notice, do they own them free and clear of debts owed against them?
For instance a stack of widgets with an unpaid $100K invoice.
For instance: a stock of ABC Widgets that, when sold, are supposed to have commissions paid to sales men. Do prior or future sales still honor commissions?
For instance: a copyright, patent or trademark (owned WFH by company), that have contractual agreements for royalties to be paid to the wfh inventors (who do NOT owned a shared copyright). Tossed out, or paid?
For instance: goods stored at a location that has padlocked the items until back rent is paid for facility. How to retrieve?
An asset sale would likely garner between $300,000 - $4,000,00. If potential buyers are not allowed to thoroughly assess contracts
, then probably $300 tops.
Other than IRS, do ANY debt holders, including those with judgments and liens, or employees with accrued unpaid salary jump past secureds? If Secured #2 is #2 position in line, #1 trumps regardless of #2's secured status and majority vote, correct?
Question Two: if secured lien holder wants the assets AND the actual corp entity (because even corp shells have value) then:
If it leaves the assets in the corp, is is liable for all contracts and debts attached to those assets? If so, it is liable only through ABC Co?
B. If it forecloses on the assets, moves them out into others of it's business
, sells off some -those are all free of encumbrances?
C. If it does "B" but keeps ABC Co shell (and retains some business activity), is it that the lien holder owns the assets outside of teh company free and clear, but the company still actually owes everyone as long as it's in business?
D. Secured Creditor (s) would still own millions in secured debt. Company would have no assets other than good will, voidable agreements and a shell value (all totaling $300K or less).
Question: If surviving part of Public (and still Public) ABC Co (which does hope to become profitable with reduced structure) simply ignores all suits -- just lets them go to judgment -- what legal negative consequences does it face?
Is there something it files showing it's secured status that can be done cheaply and ignore protracted battles. Just let the other side win? secured lender foreclosed on most assets and still is the secured lender?
Does it avoid some problems if it notices any NEW vendor that seek to do business?
NOTE: company is in type of field that new vendors and new customers will likely not care about notices nor past problems, and some of old vendors will want to restart business regardless.