hdwhit
Member
Chapter 11 is a provision of the bankruptcy law that allows companies an opportunity to restructure themselves without fear of the creditors swooping in and taking away the assets they need to run the business.
Most companies that go through Chapter 11 manage to successfully emerge and resume "normal" operations.
The stark reality is that companies find themselves in Chapter 11 because their management failed to anticipate and plan for likely changes in the business environment. A company in Chapter 11 needs to fundamentally re-assess and then change their business strategy to conform it to the new realities of the market is operates within. Unfortunately, most companies in Chapter 11 have already spent their limited funds on attorneys and the incidental costs of court proceedings and so they no longer have the working capital to implement the changes to the business that are required if it is to survive. As a result, most businesses successfully exit Chapter 11, but most of them are unable to survive more than about five years.
Most companies that go through Chapter 11 manage to successfully emerge and resume "normal" operations.
The stark reality is that companies find themselves in Chapter 11 because their management failed to anticipate and plan for likely changes in the business environment. A company in Chapter 11 needs to fundamentally re-assess and then change their business strategy to conform it to the new realities of the market is operates within. Unfortunately, most companies in Chapter 11 have already spent their limited funds on attorneys and the incidental costs of court proceedings and so they no longer have the working capital to implement the changes to the business that are required if it is to survive. As a result, most businesses successfully exit Chapter 11, but most of them are unable to survive more than about five years.