Published by Mark

Business Bankruptcy Update

April 7, 2009 at 6:20 am

Bankruptcy, as I’m fond of repeating, is a process, not a one-time event. While my Indiana business bankruptcy clients tend to be small business owners, it sometimes helps clients and blog readers for me to use news stories about larger companies to demonstrate how the process works.
Whenever there are very large companies with assets they want to continue to control, you’ll usually hear about them filing Chapter 11 bankruptcy. In an earlier blog I used the Chicago Tribune as an example of that type of bankruptcy.

Within the last two weeks I learned about two new Chapter 11 filings. City Center, an $8 billion Las Vegas casino project is the first. Like many other corporate bankruptcy cases, this one was triggered by a lawsuit, in which Dubai World, one of the owners of City Center, is suing the other partner, MGM.

Meanwhile, Charter Communications, one of the nation’s largest cable companies, has filed Chapter 11. What I want to emphasize here is the Charter intends to restructure itself, continuing to pay benefits and salaries to employees and continue to servce customers. The bankruptcy buys time for them to reorganize under the supervision of the bankruptcy court.

On a smaller scale, some Indiana companies are trying to work through debt problems. The Indianapolis-based parent company of Today’s Bedroom One, The Mattress Gallery, and Today’s Kids has been placed in receivership. That means the company will be under court supervision as they try to settle their affairs. One of the important purposes of receivership, as is true of bankruptcy proceedings, is to bring order into a chaotic situation.

Other, out-of-town, companies are attempting to cut back their operations, hoping not to reach the receivership stage, by closing outlets in Indiana. Direct Brands is closing distribution centers in Indianapolis and Terre Haute, while Sumco, Inc. is closing its metal plant. In Greenfield, a power-train component plant owned by Eaton Corporation our of Cleveland will be closing.

We seem to be hearing that more and more companies are in some stage of a bankruptcy or cutback to avoid bankruptcy. But, on the hopeful side, as I reported in a bankruptcy blog post last summer, (see “More Companies Coming Out The Other End Of The Bankruptcy Process”), more companies are successfully emerging from bankruptcy after restructuring their debts and rethinking their models for doing business.

And, while my work as an Indiana bankruptcy lawyer involves much smaller businesses than the ones who make the headlines, my job is helping those companies move through the bankruptcy process as smoothly as possible towards a new business start.

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