Receivership & Reconstruction: Understanding Legal Requirements & Exploitable Opportunities - Essay Sample

Introduction

It is important for the client to understand what is involved in the Receivership and reconstructions as business processes. In Scipio's scenario, he should make to understand all the legal requirements that are required and any possible regular opportunity that can be exploited. The process of Receivership is a solution set aside to assist creditors in recovering a given amount under the secured loan when the process is mainly applied in the conditions when the borrower defaults to pay a loan (Wiecek, 1969). Apart from borrowers using receiverships to their defaulter, it can be used in the companies that are in financial distress. This can be applied as the process of restructuring the company operations when it is heading to the bankruptcy situation.

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Scipio should be made to understand the process of reconstruction, which is the company's reorganization process. The reconstruction of a business will involve reorganizing all business operations and legal activities that guide the actions within the business organization. Scipio should do the revaluing of the assets and reassess the liabilities of his business before settling on the final decision of business operations. The process of reconstruction will involve Mr. Scipio in transferring his old business to an entirely new company (Sklar & Skowronski, 1988).

Mr. Scipio should be taken through the insolvency term and the condition at which the company or business organization can go through the insolvency process. The business of Mr. Scipio going through the insolvency because it cannot meet its financial obligations to its lenders and the debts have become overdue; from the description given by the client, he owes His grandmother $500,000; The insurance company $200,000;$50,000 for unpaid rent;$30,000 for due tax;$100,000 to miscellaneous creditors for business debts. It is therefore clear that Scipio must go through the insolvency proceedings. In insolvency, I would advise Mr. Scipio to through the informal agreement with the creditors and make the arrangements on how to settle the payments.

Options might be feasible for Scipio

From the description given by Mr. Scipio, we have noticed that the mode of business operations was a sole proprietorship. The insolvency of only proprietorship business lies with the owner and the business conditions and the situations. The alternatives that Scipio has to explore to avoid being filed bankruptcy will enable him to prevent stigma as the sole owner of the business. The first step that he will have to take is to get organized by reaching his business affairs in order. Scipio is having the option of carrying informal discussions. He should contact his grandmother and negotiate $500000 and contact the landlord to arrange the unpaid rent by agrees on the best way to settle the outstanding dues.

In the informal discussions option, the creditors will expect that Mr. Scipio presents a concise plan that clearly outlines intends to meet his obligations. It is also important to note that Mr. Scipio's proposal should be realistic and should include reasonable payments following the condition of his business's financial status. Because in the formal discussions agreement, the creditors do not have an obligation to set or make arrangements on the debtors' alternative payment. So the informal discussion will be carried on the convenience of Mr. Scipio and the time that he agreed to make the payments.

Legal Issues Might Arise

There are many legal issues involved in the informal discussions that Mr. Scipio will use in solving the problem between him and his creditors. During the formal debate, it remains possible for Mr. Scipio to obtain credit or interim or finances that he will use to finance the proposed debt settlement process. Again, in this process, the creditors are not allowed to terminate the agreement, which is made by the insolvency's fundamental reason. It is important to understand the form of the agreement made for the clearance of debt and the nature of the obligations which are signed by both parties. The company, like for Mr. Scipio when it is unable to pay its debt, will not have any impact on the legal proceedings that are underway with the creditors. But in a situation where the company is set under the formal insolvency process, then the legal position will be different.

The legal issue of the bankruptcy law is also likely to arise, the law that governs the creditors' legal rights and insolvent debtors who are not expected to pay their debts in time. In the case of Scipio, the legal issue on the bankruptcy will be looked at because it will deal with the seizure of the business assets and how possible is it for Mr.Scipio to clear his debts in time.

Steps That Are Needed For the Options

The first step required for the options is that Mr.Scipio will have to carry the first duty of making a preliminary decision on his business's real financial status before entering the formal agreement of settling his debts. Mago will have to advise the client on the best way to determine the business's state of affairs, putting together any available asset for the company to determine the real level of indebtedness of the corporation. At this point, Mr.Scipio has not agreed on the payment method but still makes an assessment of his financial status and the most convenient time to settle the debts.

Further Information Scipio Should Make Available To MagoFor Scipio to get good financial and legal advice from Mago he should provide the required additional financial reporting; the financial report provided should have full information regarding his income and expenditure when the business was operational.

Required information is that he should provide deliver on-demand all property held by him or the ones acquired after the business bankruptcy. If there is any change of address of Mr. Scipio's business location or the residential location, then Mago needs to be notified of any legal complexity.

Again all the relevant documents relating to the business should be made adjudication available to Mago; this will help prepare a new statement for the reconstruction of a new location.

Conclusion

In the process of business Receivership and reconstruction, the business person like Mr. Scipio should always be proactive and engage in the possible options earlier to assist in improving the business's condition. The process of getting organized will potentially bring financial solutions and generate an agreement with the creditors at an early stage before the financial problem escalates. In business, it very important to think about problem-solving before the situation becomes dire

References

Sklar, M. J., & Skowronski, J. J. (1988). The corporate reconstruction of American capitalism, 1890-1916: The market, the law, and politics. Cambridge University Press.

Wiecek, W. M. (1969). The Reconstruction of Federal Judicial Power, 1863-1875. Am. J. Legal Hist., 13, 333.