Tag Archives: debt
Warning Signs That a Business Should Consider Chapter 11
For many struggling companies, Chapter 11 bankruptcy represents a viable option for reorganizing debts and returning to solvency. This remedy allows a company to restructure obligations under the supervision of the bankruptcy court while remaining in operation. Unfortunately, business owners too often delay filing for Chapter 11 until a crisis peaks, which can limit their […]
Negotiating With Creditors During a Chapter 11 Restructuring
One of the most critical aspects of a Chapter 11 can be negotiating with creditors on key aspects of the restructuring plan. The goal is to forge agreements that allow the business to stabilize and recover while ensuring creditors recover as much as possible relative to the alternative: liquidation. Businesses that approach creditor negotiations with […]
What Is the Typical Timeframe of a Chapter 11 Bankruptcy?
Chapter 11 bankruptcy is a legal process designed to help financially distressed businesses reorganize their debts and regain solvency. Chapter 11 gives the business the opportunity to restructure its finances, renegotiate contracts and develop a plan for repaying creditors over time, rather than having to liquidate assets and cease operations. The Chapter 11 process is […]
How Chapter 11 Can Help Save a Failing Franchise
Franchise businesses, especially in industries like food service, hospitality and retail, often face heightened financial pressures. These can be due to high overhead — such as lease payments, royalty and advertising fees, payroll and inventory — combined with evolving consumer tastes, disruptive economic trends and internet business, which has shifted how customers interact with brands. […]
Rite Aid’s Demise Shows the Pitfalls of Exit Financing in Chapter 11
Exit financing is a new loan or credit facility that a company secures as it prepares to emerge from Chapter 11 bankruptcy. It can be a useful component of a successful reorganization plan, helping to provide a foundation for the company’s post-bankruptcy future. However, as demonstrated by national pharmacy chain Rite Aid’s recently announced second […]
What Are the Chief Causes of Business Bankruptcies?
A significant risk for companies of all sizes and industries is that economic circumstances, some outside their control, will force them into insolvency. Such risks become more apparent as market forces and regulatory actions both home and abroad can affect a company’s prospects. Understanding the most common reasons for business bankruptcy can provide valuable insight […]
What Goes Into Planning a Chapter 11 Exit Strategy?
Exiting Chapter 11 bankruptcy can be a turning point for a distressed business, offering the opportunity to reset operations, restructure debt, and regain financial stability. To maximize the chances of success, a business must develop a carefully tailored exit strategy that aligns with its unique financial situation, business model, and relationships with creditors. Chapter 11 […]
Reorganizing Various Classes of Debt in a Chapter 11 Plan
Chapter 11 bankruptcy, also referred to as reorganization, is primarily utilized by corporations, partnerships and LLCs to restructure and partially repay their debts while continuing their business operations. The principle behind this remedy is that a debtor company is more valuable as an operating entity than in liquidation (i.e., through a chapter 7 bankruptcy), thereby […]
Weighing Assignment for the Benefit of Creditors as a Debt Remedy
Companies facing severe financial distress have more than one relief option to consider. An assignment for the benefit of creditors (ABC) is a less commonly known alternative to bankruptcy proceedings like Chapter 11. An ABC involves a transfer of the debtor company’s assets to an assignee, who assumes responsibility for liquidating the assets and distributing […]
Chapter 11 Filing Requires Intensive Documentary Preparation
A Chapter 11 bankruptcy allows a business in financial distress to reorganize and restructure its debts while continuing to operate, with the goal of returning to solvency. Filing for Chapter 11 is a complex process that requires substantial documentation. The bankruptcy trustee needs to have a complete picture of the company’s finances in order to […]
