When a business gets burdened with a heavy debt, the proprietor may choose to opt for reorganization by taking the route of bankruptcy. Filing for a Chapter 11 bankruptcy is one of the possible solutions that they may opt for. It allows the business owner to draw up a plan to make a profit in the period following declaration of commercial bankruptcy, by choosing to reduce costs and improve the cash flow or by acquisition of revenue generating assets.
In the meantime, declaration under Chapter 11 would mean that the creditors are kept at bay while the business debt negotiations are ongoing. Business bankruptcy of this nature involves more time and expenses as compared to a Chapter 7 bankruptcy. But at the same time, it allows the opportunity for the business to reorganize and the proprietor more time to plan his or her filing.
A Rockville Maryland Chapter 11 attorney recently helped one company file for a voluntary plan for reorganization under Chapter 11. This followed an agreement between the stakeholders of the company to strengthen the financial base of the company so as to support the long-term requirements of itself and its subsidiaries. The reorganization, which is also supposed to involve a restructuring of the corporate debt worth more than $500 million, is being envisaged to receive court approval and be effective within 90 to 120 days.
The current board of the company, which is supposed to oversee the entire process until a new board takes its place, appears to have planned the bankruptcy after having sought proper legal and corporate advice, so that it will not disturb the day to day affairs of the company. However, given that the plan is currently pending before the bankruptcy court, the company may do away with the quarterly meeting scheduled with its investors for the moment.
Source: Chillicothe Gazette, “USEC Inc. files for bankruptcy Restructuring not expected to impact Piketon operations,” Mar. 5, 2014.