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Chapter 11 bankruptcy filed by tech-challenged SkyMall magazine

All types of businesses, including in Pennsylvania, have taken advantage of the federal bankruptcy laws to reorganize their affairs and attempt to stay in business with a streamlined new business approach. The legal vehicle for that attempt is a Chapter 11 bankruptcy filing. That chapter of the Bankruptcy Code is known generally as the business reorganization section.

A recent filing was surprising to some observers. They didn't expect to see a request for bankruptcy relief made by the well-known company that for years has been stuffing most domestic airplane seat pockets with its publications. The surprise for many is that the SkyMall brand is so well-known that its niche positioning seemed like a sure thing for a long time to come.

The catalog was a success up until the airlines began offering Wi-Fi access, thus allowing customers to use their powerful smart phones and other devices up in the air. In fact, the parent company that owns SkyMall reported that as the primary reason. It stands to reason that the magazine, limited as it must be by the nature of its medium, fell to the passengers' demands for access to an infinity of products and information even during flight time.

Most of the airlines were moving toward canceling their contracts with the magazine. This placed the company in an impending liquidity crisis that was ominous looking. Without specifying an alternative marketing prototype, the CEO of SkyMall's parent company expressed hope that the product could find a "home" and continue to operate.

Sometimes, the filing of a bankruptcy for reorganization in Pennsylvania or elsewhere can attract new investors who may see the way for the company to make a new start. Often, however, interests come forth that only want to pick off small components of the company's infrastructure. In this case, it seems doubtful that the company has in mind a way to prevent an eventual conversion to Chapter 7 liquidation. If the owners of the company had a vision of the company in a future successful reincarnation, they likely would have articulated it to keep unfriendly interests away from the rebuilding project.

Source: The New York Times, "SkyMall's Parent Files for Bankruptcy Protection", Hiroko Tabuchi, Jan. 23, 2015

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