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Chapter 11 bankruptcy allows company to restructure debt

Whether the business is a huge corporation, a medium sized partnership or a small sole proprietorship, a business can face financial uncertainty. Many Pennsylvania businesses have found themselves struggling to keep up with growing debt while still continuing to spend to money necessary to do business. For some, Chapter 11 bankruptcy allows them to continue operating while reorganizing their debt into a more manageable position.

One energy corporation, Stone Energy Corp. has recently decided that filing for Chapter 11 bankruptcy is in its best interest. Many oil and gas companies have experienced financial difficulties with the decrease in oil prices over the past several years. Records indicate that while the company currently has assets of approximately $1.2 billion, it owes approximately $1.7 billion to creditors. Through the Chapter 11 filing, a proposal has been made to eliminate approximately $850 million in debt.

The proposed Chapter 11 bankruptcy restructuring will allow the company to continue operating with shareholders still retaining a percentage of the company. The plan also contemplates the sale of acreage owned by the company as a way to help offset some of its debt. This action will allow the company to survive and continue operation in preparation for a future increase in business.

Many companies throughout Pennsylvania experience a downturn in business and thus a decrease in income. At times, this decrease can place them in a position where they owe more than they are bringing in. If this situation continues over a period of time, it may be a good idea to restructure using Chapter 11 bankruptcy. Consultation with an experienced attorney is often one of the first steps in deciding if this is the best option.

Source: cfo.com, "Stone Energy Files Chapter 11 to Reduce Debt", Matthew Heller, Dec. 16, 2016

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