Nonprofit Organization Offers ‘a Private Chapter 11’

There is an alternative to Chapter 11. It is the Credit Managers Assn. of California, a venerable nonprofit organization that works out repayment plans for debtors at far less cost than business reorganizations supervised by bankruptcy courts.

“We are a private Chapter 11,” said Geoffrey L. Berman, who supervises business reorganization plans and liquidations for the CMA. Based in Burbank, the CMA can save struggling businesses $100,000 or more in legal fees, Berman said.

Rather than charge hourly fees, CMA receives a percentage of the funds repaid to creditors. The drawback is that CMA reorganizations have no legal authority and succeed only if creditors work together.

A key attraction, though, is that lawyers are not calling the shots, said CMA President Richard Kaufman. “It’s a settlement between business people with lawyers helping out, not the other way around,” he said.