There are several advantages to selling, and monetizing a bankruptcy claim.  Following are the most common reasons bankruptcy creditors typically sell their claims.

• The mitigation and elimination of risk associated with holding a bankruptcy claim.  The sale of a claim also removes the risk of receiving:
  • Illiquid equity securities with potentially limited marketability and unknown true market value; and/or
  • Small distribution checks over a long period of time.
• A lump-sum cash payment, giving a creditor immediate cash flow and the ability to reinvest the recovered capital into their business sooner than otherwise expected.
• The elimination of the time, energy, human and financial capital, and other resources required to monitor and protect a creditor's interests in a case.
• The time value of money and possibility of receiving more for a claim now, then waiting until the resolution of the estate.
• The removal of debt off the business's books.  If the receivable had already been written off, the creditor may receive an unexpected cash recovery through the sale.