February 28, 2011 Articles

Contingent Claims & Solvency Analysis Part I: A Known Defective Product; Claims Unknown, but Probable

It is not uncommon for a company with a defective product, significant litigation, or both to find itself in bankruptcy.

By S. Todd Burchett, Donald C. Wengler, and L. Rand Gambrell

This article is the first in a four-part series of articles addressing the quandaries that a trustee encounters when dealing with contingent claims in the context of a solvency analysis. Read Part 2, Part 3, and Part 4.

It is not uncommon for a company with a defective product, significant litigation, or both to find itself in bankruptcy. So, when a trustee is appointed and begins the process of assessing the claims of creditors, the trustee may be confronted with a dilemma over certain potential claims.

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