When all else fails, file for Chapter 11. ATopTech Inc., a software developer and Hampshire Group, Ltd., a menswear supplier, have some things in common. First, they both filed Chapter 11 bankruptcy to sell their assets. Second, Intellectual Property played a significant part in their cases. Their road to Chapter 11 was different, though. ATopTech lost a copyright action brought by Synopsys, Inc. and was facing a $30.4 million it had no hopes of paying. Hampshire Group owed $15 million to its creditors which included $7.4 million to its secured creditor, Salus Capital Partners. Hampshire Group’s primary assets are its trademarks.
**WHY YOU SHOULD KNOW THIS. **These cases show that bankruptcy can be an effective business tool when all else fails. For ATopTech, it’s a shield against the collection efforts of a judgment-creditor. For Hampshire Group, it’s a way to maximize its assets for the benefit of creditors. Intellectual Property is considered a general intangible for bankruptcy purposes. The value of general intangibles in a bankruptcy can fluctuate dramatically. The best test for value is what a willing buyer will pay for the assets. The bankruptcy sale process can help with maximizing the value.