Receivable Put Options 

What is a Receivable Put Option?

The Receivable Put Option Contract was developed as an alternative to credit insurance, or to provide protection to sellers if credit insurance wasn’t available. The Put Option Contract provides sellers the ability to put their unsecured trade claims to a counter-party in the event of insolvency or liquidation. The contract can be customized (tenor, indemnity, contract amount) to meet the sellers needs.

Why Purchase a Receivable Put Option Contract?

One should consider purchasing a Receivable Put Option Contract if you want to increase sales to new or existing buyers, or want to decrease accounts receivable credit exposure.

Here is an example depicting the benefit of the Put Option Contract:

Does a Receivable Put Option Contract Cover Slow-Pay or Protracted Default?

The Receivable Put is a loss-occurring contract and only covers Chap 11 & Chap 7 bankruptcy events. The bankruptcy filing must occur within the contract period or there is no coverage (even if sales occurred during contract period). The contracts are loss-occurring and do not provide coverage for protracted default or slow-pay.

There is an active Receivable Put Option market for following debtors:

  1. JC Penney Co., Inc.
  2. The Neiman Marcus Group LLC
  3. Revlon, Inc.
  4. Guitar Center, Inc.
  5. Petsmart, Inc.
  6. Neiman Marcus
  7. Stein Mart, Inc.
  8. Petco Animal Supplies Inc
  9. Bed, Bath & Beyond Inc.
  10. Rite Aid Corp.

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