In-House Legal Department's Role in Managing Bankruptcy Risks and Costs
In times of economic crisis, reducing your exposure to bankruptcies is critical to your business survival. It can be difficult to know where to begin, however, as bankruptcies pose risks that are often scattered and obscured throughout large organizations. Communication and collaboration between legal, finance, and operations functions is vital to mitigate risks and reduce costs because different functions possesses unique expertise, knowledge, and business intelligence. For instance, legal can enforce creditor rights in state court or bankruptcy proceedings, finance can manage customer credit exposure and collections, and operations can identify threats to the supply chain and enterprise infrastructure. Bringing these diverse teams together can be challenging, particularly if they have functioned independently in the past and lack the technological tools to share their knowledge and workflows.
Legal departments can provide valuable assistance to other departments and business units by acting proactively. For example, legal can negotiate debt settlements, issue demand letters, or take legal action earlier in the collection process than done traditionally. Legal can reduce credit exposure by assisting finance in making proper reclamation demands, stopping goods in transit to insolvent companies, and determining whether to continue doing business with companies operating under bankruptcy protection. After a bankruptcy filing, legal can help repossess collateral by obtaining relief from the automatic stay, file administrative claims, ensure that defaults are cured when leases and contracts are assumed or assigned, and assert “critical vendor” leverage, where possible. Legal can help reduce credit exposure prospectively by negotiating better payment terms when dealing with suppliers, customers, landlords, tenants or other contract counterparties, including requiring increased assurances of payment and performance or more stringent default or termination provisions. Finally, legal can make sure debt repayments from potentially insolvent customers are structured so as to preserve defenses to preference liability in case the customer eventually files for bankruptcy.
Regardless of how you currently manage your enterprise-wide bankruptcy risks, CSC’s Best Practice Solution for Bankruptcies can help you control your credit and liability exposure while improving your recoveries and cutting costs. Our secure, online platform is an ideal forum for legal, finance, and outside counsel to collaborate and coordinate court appearances, manage claim filings, draft motions or objections, or handle any other bankruptcy matters.
CSC’s technology helps you to coordinate work among numerous individuals and departments by delegating tasks to users with accompanying deadlines. For example, you can assign bankruptcy tasks to specified users (including outside counsel) to review documents, draft motions, file claims, or make court appearances. Our custom reporting capabilities allow you to track information by bankruptcy case, matter, or task. Where extensive bankruptcy litigation is required, you can manage and reduce outside counsel spending with our e-billing technology. Redundant document storage and disaster recovery costs can be eliminated by storing your documents in our matter management system. We can help you streamline your processes by conducting a workflow analysis and partnering with you to outsource cumbersome or repetitive legal administrative tasks. Regardless of how you currently manage bankruptcies, we can help you do it better—saving you time and money, reducing your exposure, improving your recoveries, and allowing you to get back to business.
To obtain a full-length white paper on in-house legal department's role in managing bankruptcies or to learn more about CSC Bankruptcy Management Solution, please email or call us 800.927.9801 Ext. 3678.
