Executive Summary
With no cash to support a bankruptcy filing and no workable restructuring thesis, the senior secured lender chose a public Article 9 sale. CMBG Advisors ran the process on a 30-day timeline, delivered the assets through a credit bid, and achieved the same practical outcome a liquidation Chapter 11 would have produced at a fraction of the cost.
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Situation
The company was a publicly traded digital media business that had reached the end of its liquidity runway. It faced immediate shutdown risk, had essentially no available cash, and no longer had a realistic path to finance a traditional in-court restructuring.
A Chapter 11 filing was evaluated, but the expected administrative burden and professional cost, estimated at roughly $1.5 million to $2 million, would have consumed more liquidity than the company had left. Just as important, the facts did not support a credible reorganization thesis.
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Capital Structure
The debt stack and stakeholder map made the practical economics of a court process especially difficult.
Senior Secured Debt
$5 million
Junior Secured Debt
$3 million
Unsecured Debt
~$20 million
Public Shareholders
Thousands
Cash
Essentially none
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Why Article 9 Instead of Chapter 11
With no meaningful cash cushion and no viable operating turnaround, the central question was not whether the business needed a sale process. The question was which sale process could be funded, marketed publicly, and completed in a way that was commercially reasonable.
The senior secured lender chose a public Article 9 sale because it preserved the ability to market the assets broadly, allowed secured creditors to credit bid, and could be run on an accelerated timeline without the overhead of a Chapter 11 case that the company could not afford.
- Low cost relative to a Chapter 11 filing, with expenses in the low six figures instead of seven figures.
- A roughly 30-day timeline, which mattered because the business did not have the liquidity to support a longer process.
- Full public marketing rather than a quiet insider transfer.
- A clear ability for secured creditors to credit bid through the public process.
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The Process
CMBG Advisors was engaged to run the public Article 9 sale process and manage the work required to make it transparent, organized, and commercially reasonable under the circumstances.
- Prepared and coordinated the required notices and publication steps.
- Organized the data room and diligence flow for prospective bidders.
- Managed buyer outreach, inbound Q&A, and follow-up requests.
- Coordinated access to information for interested parties on the same timeline.
- Managed bid logistics, submission requirements, and communication with the secured creditors.
- Ensured both the senior and junior secured creditors had the ability to participate through credit bids.
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Outcome
An insider-affiliated entity designated by the senior secured lender submitted the winning bid through a credit bid. The assets were transferred through the public sale process rather than through a cash-funded Chapter 11 liquidation.
- Delivered the assets to the senior lender's affiliate.
- Provided a modest carve-out to the junior secured lender.
- Wiped out roughly $20 million of unsecured debt.
- Eliminated all public shareholders.
- Closed quickly and efficiently under severe liquidity pressure.
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Result
The senior secured lender obtained the business through a transparent public process that could be defended as commercially reasonable and was actually executable under the company's liquidity constraints.
Unsecured creditors and equity holders received no recovery, which was also the expected economic outcome in a liquidation Chapter 11. The difference was that the Article 9 path reached that result materially faster and at a fraction of the cost.
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Key Takeaways
- A formal Chapter 11 process is not always the right answer when the business cannot fund the case and no reorganization path remains.
- A public Article 9 sale can still be transparent, marketed, and commercially reasonable when run with discipline.
- Credit bidding can create a workable path for secured lenders when third-party cash bids are uncertain.
- In zero-runway situations, speed and process design often matter as much as legal theory.