Phones Answered 24 Hours A Day Call 800-653-2243
Thompson Law Group, P.C.
Experienced Lawyers on Your Side
Menu / Navigate
Secondary Nav

Chapter 11 gives business the chance to re-structure old debt

When a business in Pennsylvania or elsewhere files a Chapter 11 bankruptcy reorganization case, there are several key benefits that it may legally pursue in its own behalf. Importantly, the business does not have to close its doors and may continue operating during the bankruptcy. In some cases, it may even be successful in raising new financing to replenish the company's financial coffers during the Chapter 11 proceeding.

While the business remains operating, it keeps its good will, customer base and recognized brand. At the same time, it may succeed in restructuring existing debt by getting the Bankruptcy Court to approve reduced interest rates on some loans that are excessively more than the going rate. Chapter 11 also provides an opportunity to "strip" a loan's principal balance down to the market value of the property.

That last benefit gives the debtor the opportunity to get back on track with real property that has become worth far less than the amount owed on it. The debt is essentially reduced to reflect the amount that could be obtained if the property were sold on the open market. In these and other ways, the company may obtain valuable assistance in streamlining its debt and improving its operational base. 

In another state recently, there was an example of how this process can benefit the small or medium-size business owner. A business known as Treetops Resort in a neighboring state announced that it was emerging from a Chapter 11 in much better financial shape than when it filed back in Nov. 2014. The golf and ski resort indicated that it had gotten rid of old debt and positioned itself for new operational improvements.

The process of reorganization is conducted pursuant to a framework of federal laws. These are contained in the legislative compilation known as the Bankruptcy Code. The framework of federal laws that provides for Chapter 11 relief is applicable in Pennsylvania and in all other states. 

Source: detroitnews.com, "Treetops Resort emerges from bankruptcy", July 28, 2015

No Comments

Leave a comment
Comment Information

Contact the Firm

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Warrendale Office
Main Office
125 Warrendale-Bayne Road
Suite 200
Warrendale, PA 15086

Toll Free: 800-653-2243
Map & Directions

Pittsburgh Office
DOWNTOWN PITTSBURGH
555 Grant Street Suite 331
Pittsburgh, PA 15219

Toll Free: 800-653-2243
Toll Free: 800-653-2243
Map & Directions

Greensburg Office
GREENSBURG OFFICE
101 North Main Street, Suite 104-A
Greensburg, PA 15601

Toll Free: 800-653-2243
Toll Free: 800-653-2243
Map & Directions

Canonsburg Office
Satellite Office
2400 Ansys Drive
Canonsburg, PA 15317

Toll Free: 800-653-2243
Map & Directions

Monroeville/Wilkins Township office
Satellite Office
400 Penn Center Boulevard
Suite 101
Pittsburgh, PA 15235

Toll Free: 800-653-2243
Map & Directions