FILING FOR PROTECTION

FILING FOR PROTECTION

But filing for protection under Chapter 11 stretches the

reorganization process from nine months to four years, on

average, and is at least ten times more expensive than an

informal reorganization. This means that creditors of a troubled

company almost always will receive more money in an informal

reorganization than via bankruptcy proceedings. The crisis

manager can shorten the reorganization process, outside of

bankruptcy court, from three months to nine months. If he or

she cannot ferret out “free cash” – that is, cash not designated

for specific creditors – or if he or she cannot negotiate an

informal plan or reorganization with creditors the debtor

company still can file for protection. The option is always there.

Extracted from a book titled: RECESSION BUSINESS STRATEGIES by Prof John C. Mbuya

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