Plans to reorganize in a Chapter 11 can be a miracle solution for a struggling business, as shown by the example of many reorganized and refinanced companies now operating and sometimes even thriving around the country. However, reorganization efforts do not always succeed, particularly if the red ink that plagues the company is too deeply entrenched to be rescued by outside investors. One example is the recent announcement by Sports Authority that it will close all of its 450 stores nationwide, including some in Pennsylvania, and liquidate them presumably in a Chapter 7 bankruptcy.
In Pennsylvania and all jurisdictions, a company's filing for bankruptcy protection may facilitate the resolution of many different types of business disputes and claims. For example, in the recent filing by SunEdison Inc., a dispute pending in another court turned its focus to the Bankruptcy Court. Vivint Solar Inc. had sued SunEdison over SunEdison's alleged failure to live up to its obligations under a merger agreement. Vivint, which installs solar panels, announced that it would participate in the bankruptcy proceedings to protect its interests and maximize its recovery.