A debt collector in another state has filed for bankruptcy. The bankruptcy filing took place on a recent Sunday. When a company in the state of Massachusetts cannot keep up with its liabilities due to economic reasons, for example, it may find Chapter 11 bankruptcy protection to offer the financial relief it needs.
The debt collector that has filed for bankruptcy entered into an agreement with a holdings company that acquires, manages and services consumer debt portfolios. The latter will therefore assume ownership of the debt collector’s asset portfolio. The holdings company has agreed to invest more than $400 million in this process.
The chief operating officer of the debt collector said that the proceeds from its agreement with the holdings company will lead to a $264 million final purchase price in exchange for all of the reorganized business’s equity. After this transaction has been completed, the debt collector will end its U.S. operations. The closing is slated to be finished by the latter part of this year. The company should continue its operations in Canada under the holdings company’s ownership.
At times, a company in Massachusetts or elsewhere might face financial trouble due to a struggling economy. In some situations, it may seem impossible to climb out of the hole on one’s own. However, through a Chapter 11 bankruptcy filing, it is possible to reorganize the business’s financial affairs and enjoy a much-needed fresh financial start. An attorney can help to provide guidance during this type of filing, which can be more complex than other types of bankruptcy filings in the United States.
Source: reuters.com, “SquareTwo Financial Corp files for Chapter 11“, March 19, 2017