A university foundation in another state recently decided to file for bankruptcy. However, the university will continue to operate as normal as it works on sorting out its financial troubles as part of its Chapter 11 bankruptcy filing. Companies in Massachusetts that are struggling to stay afloat financially may find Chapter 11 bankruptcy protection to be a viable solution for them.
When a company files for Chapter 11 bankruptcy protection, the United States’ justice department will appoint committees to represent the stakeholders’ interests in developing a solid reorganization plan for the business to finally get out of debt. After this plan is drafted, the stockholders, creditors and bondholders have to accept the plan. The court must also confirm this plan.
If the stakeholders are unable to agree about a plan, the business may have to liquidate its assets. In the case of the university foundation that recently filed bankruptcy, the creditors include banks and buildings that the foundation owns. The foundation can try to decrease its expenses to resolve is financial issues.
Chapter 11 bankruptcy protection makes it possible for a struggling business to undergo a restructuring. During this process, it receives input from customers, shareholders, creditors and suppliers. It is different from Chapter 7 bankruptcy, where all company operations come to a halt and the company goes out of business. Navigating the Chapter 11 bankruptcy process can understandably seem overwhelming and confusing at times. An attorney in Massachusetts can provide the guidance needed at each stage of the process to ensure that one’s business is placed on the path to financial recovery.
Source: thenorthwestern.com, “A primer on Chapter 11 bankruptcy, what it means for the UWO Foundation“, Nathaniel Shuda, Aug. 21, 2017