Bringing you up to date on the ATA bankruptcy hearing, I emphasized how bankruptcy is a process with certain stages. By now you know that, as a small business bankruptcy attorney, I need to stay on top of news about businesses in various stages of that process, so as to offer the most up-to-date legal and business advice to my Indiana bankruptcy clients.
Three business stories from just the past week or two illustrate what I mean by “bankruptcy process”. The first story is about a 175-year old company called American LaFrance, or ALF, which is one of the oldest fire and emergency service vehicle companies in the U.S.. (One observation to make here is that even very old and solid companies sometimes need to make use of the bankruptcy system.) The bankruptcy court judge entered an order confirming ALF’s Chapter 11 Plan of Reorganization, which means the company can emerge from bankruptcy. ALF was “in bankruptcy” for less than 17 weeks. In an earlier bankruptcy blog I explained that the bankruptcy law is designed to treat all parties fairly. In the ALF case, 90% of the creditors supported its plan.
In Virginia, Movie Gallery, Inc. successfully emerged from Chapter 11 bankruptcy protection after restructuring its debt. Movie Gallery, started with 97 stores thirteen years ago, is now the second largest North American video rental company in the country. “Through this restructuring,” explained the company chairman, “we have effectively addressed our financial and operational challenges.” In practical terms, all of Movie Gallery’s existing common stock and bonds were cancelled, and under the bankruptcy plan, new common stock and bonds are being issued to unsecured creditors of the company. Again, bankruptcy is a process.
Meanwhile, In Delaware bankruptcy court, Hilex Poly Company, the world’s largest plastic bag company, announced an agreement with its creditors under a “voluntary” Chapter 11 reorganization plan. This means the company can continue to operate as usual while the debt restructuring is in process. In this case, all obligations to customers could be fulfilled, and suppliers could be paid in full. The mechanism used in this case was special financing from GE Capital and Morgan Stanley. Once more, a process was put into play.
My work as a small business bankruptcy attorney in Indiana is to help each bankruptcy client business owner move through the process as smoothly as possible by adopting strategies that are best for that business, and then carrying through step by step towards a successful fresh business start.