Bankruptcy Trade Claim FAQs

T-REX is designed for business creditors seeking to sell the following types of unsecured Chapter 11 bankruptcy claims known as "trade claims":

• Vendor claims - Payment rights against a bankrupt debtor that arise from the sale of goods or services to that debtor prior to the debtor's bankruptcy filing
• Lease rejection claims- Damages arising from the rejection of a lease by the bankruptcy trustee
• Contract rejection claims - Damages arising from the rejection of a contract by the bankruptcy trustee

Demand is highest for those unsecured claims meeting the following criteria:

• Debtor is a large, well-known U.S. company;
• Debtor is in Chapter 11 bankruptcy (market for Chapter 7 claims is not as large);
• Claim has not been pledged as collateral;
• Claim is not disputed or subject to an offset or preference action; and
• Claim consists of "pre-petition" debts (i.e., debts arising before the debtor's bankruptcy date).

• Get paid now - Avoid the bankruptcy "waiting game" (Chapter 11 bankruptcies take an average of 2.5 years to resolve)
• Receive lump sum cash payment - Eliminate the risk that you receive an illiquid equity distribution with restrictions on when you can sell
• Lock in your recovery - Eliminate the risk that your recovery value declines as your bankruptcy case drags on
• Save time and money - Avoid the endless stream of legal bills and paperwork generated by complex Chapter 11 bankruptcy cases
• Write-off your losses - Assign a definitive sales price to your bankruptcy receivables so that you can write off the unpaid portion
• Time your write-off - Control when you write off the tax loss arising from your unsecured Chapter 11 claim

• Low-ball pricing- Don't get short-changed on the sale of your bankruptcy claim. Make sure you know the market rate for your claim before you sell. Learn how T-REX gives you the ability to research the latest pricing in the claims trading marketplace through an open bidding format. (See "How can I research pricing?").
• Lack of competition- Don't take the first offer you receive. Obtain quotes from several different claim buyers before you sell. Learn how T-REX markets your auction to a large pool of experienced claim buyers. (See "Who can bid on my claim?").
• Inexperienced claim buyers - Don't get burned by a first-time claim buyer. Know who you are dealing with as fly-by-night operations do exist in the claims trading industry. Learn how T-REX enables you to research who's been buying the most claims in your case. (See "How can I research claim buyers?").

Buying bankruptcy trade claims is a high risk / high reward type of business, which attracts a wide variety of participants, ranging from professional distressed debt investors to fly-by-night operations. The reputable, experienced buyers are usually hedge funds or investment banks, many of which specialize in buying unsecured bankruptcy claims.

Claim buyers (often referred to as "vulture investors") purchase unsecured claims at a discount for numerous reasons:

• Return - The buyer can turn a profit where the present value of the ultimate bankruptcy payout exceeds the price paid for the claim.
• Control - By purchasing a large block of the Debtor's unsecured debt, the buyer can push for a Chapter 11 plan that converts debt into sufficient equity to control the Debtor's operations.
• Leverage - The buyer can block any Chapter 11 plan that it opposes by using votes gained from purchased claims.

The bankruptcy claims trading market is NOT regulated by the SEC or by other government agencies. The process for buying and selling unsecured bankruptcy claims is instead governed by general legal principles such as contract law.

The federal bankruptcy courts do play a limited role in enforcing certain notice requirements (Rule 3001 of the Federal Rules of Bankruptcy Procedure) and restrictions against claims trading among insiders and fiduciaries of the debtor. However, the federal bankruptcy courts are not required to approve the pricing or contract terms of a claim sale. The bottom line is that you are on your own when selling your unsecured bankruptcy claim.

Our mission at T-REX is simple: To get you the best available pricing for your bankruptcy trade claim.

• Competitive bidding - Bidders compete head-to-head for your claim in real-time
• Large bidder pool - We market your claim to a large pool of experienced claim buyers
• Free - Post your auction at no charge
• No obligation - You can decline all bids
• Anonymous - Your company name is hidden from the general public

It's easy. Click Post Auction and enter the required information. We will contact you shortly thereafter to confirm your auction listing. T-REX membership is NOT required to post an auction.

It's FREE. You do NOT pay any listing fees when posting your auction. The winning bidder of your auction pays T-REX a modest commission fee if your auction transaction closes.

No. You do NOT need be a T-REX Member to post an auction.

Yes, with respect to the general public. Neither your company name or contact information is displayed on your public auction listing. We only disclose such information to T-REX-approved bidders.

T-REX markets your bankruptcy claim auction to a large pool of distressed debt buyers, including well-known investment banks and hedge funds. These buyers compete head-to-head for your claim in real-time, ensuring that you receive the highest available price in the claims trading marketplace.

No. T-REX auctions are non-binding. You incur no obligation when posting an auction. You select the winning bidder based on your own criteria (price, reputation, relationship, etc.). You can award the auction to any one of your bidders or none at all if you are dissatisfied with the bidding results.

Bankruptcy trade claims are purchased at a discount of face value. For example, assume that a claim buyer bids 60% on your claim. This means that the claim buyer is willing to purchase the undisputed portion of your claim for 60 cents on the dollar.

In pricing an unsecured bankruptcy claim, distressed debt buyers spend a considerable amount of time and money trying to predict the claim's ultimate recovery value. They typically focus on the following factors:

• Debtor's current financial condition;
• Debtor's future prospects;
• size of Debtor's overall asset pool;
• number of other claims in the case;
• projected time period from claim purchase to bankruptcy payout;
• leverage value of any votes gained from your unsecured claim;
• the priority of your claim;
• whether your claim is disputed; and
• size of your claim.

Don't get low-balled on pricing. T-REX enables you to research the market rate for your debtor through an open bidding format. You can actually see how much claim buyers are willing to pay other creditors for their bankruptcy trade claims.

Simply sign up at no charge to get started. You can monitor recent claims trading, subscribe to auction watchlist alerts and view live auction pricing. Take Tour

Not necessarily. Price is only one of many factors to consider when selling your unsecured Chapter 11 claim. That's why T-REX gives you the freedom to choose the winning bidder of your auction (or none at all). Here are some important factors to consider when analyzing claim buyers:

• claim buyer's experience and reputation;
• number of bankruptcy claims buyer has purchased;
• claim buyer's financial strength;
• claim buyer's flexibility over contract language; and
• convenience (wire payment options, pre-paid shipping, toll-free calling, etc.).

T-REX's Trading Reports enable you to research who's been actively buying claims in your bankruptcy case. You can also see whether claims trading in your case is heating up or cooling down. Sign up (it's free) to get started or Take Tour.

After your bankruptcy claim auction closes, you have an important choice to make: award the auction to any one of your bidders or none at all if you are dissatisfied with the bidding results. If you select a winning bidder, T-REX provides you with the contact details for that bidder and vice versa. The two of you are on your own at this point. You can close the contemplated transaction or simply walk away if you cannot agree on contract terms. T-REX is not a party to your transaction.

The "assignment of claim agreement" (sometimes referred to as the "claim assignment agreement") is the legal contract used to document the sale of the bankruptcy claim from you to the claim buyer. Under this agreement, the party selling the claim is known as the "Seller" or "Assignor" while the party buying the claim is referred to as the "Purchaser" or "Assignee."

You should carefully review the winning bidder's claim assignment agreement. Many boilerplate versions of this contract heavily favor the claim buyer.

This depends on the size of your claim. The larger your claim, the more success you will have in negotiating contract terms with the claim buyer. T-REX is not a party to your contract in any case.

The claim buyer assumes the risk of a declining recovery value or no recovery at all in your bankruptcy case. However, the claim buyer does NOT take the risk that the bankruptcy court disallows all or part of your claim because of a dispute or set-off with the Debtor.

If such a disallowance occurs after you sell your claim, you must refund to the claim buyer the affected portion of the purchase price with interest. This point is non-negotiable. Carefully review your contract with the claim buyer so that you understand what triggers the refund and how much interest you would pay.