Recently I met with a business owner who wanted to use Chapter 11 to solve his business problems.   He explained that his company was having severe cash-flow problems, that a friend had told him that Chapter 11 had saved his business and that his friend had  recommended that he hire me to file a  Chapter 11 reorganizations. He wanted to hire me to reorganize his business under  Chapter 11.

A quick look at his balance sheet and his recent cash-flow statements confirmed that his business was not going to be able to pay its obligations as they came due.  Yes, the business was insolvent.

Yes, Chapter 11 does in fact allow debtors flexibility to restructure debts, reject unprofitable executory contracts (such as leases). Chapter 11 reorganizations can be used in appropriate cases to save a business and jobs.

Decades of helping debtors, creditors and other parties in interest in Chapter 11 reorganizations and workouts from smaller family owned businesses to “mega cases” with billions of dollars at stake, has afforded me perspective to know which businesses are likely to benefit from a Chapter 11 reorganization and which ones may be better served by another strategy.

Thank you for the trust.

But No – This was not a good candidate for a Chapter 11 reorganization.

After reviewing his balance sheet and cash flow statement and discussing the issues that had lead to the current problem, a much simpler non-judicial solutions became evident.   Before embarking on a costly Chapter 11 business reorganization, it made better sense for us  to explore these other options.    In his case, we were able to achieve a successful resolution of the issues without the need of a full Chapter 11 reorganization.

I wanted to share this story because it is not uncommon.    While there are countless businesses for whom a Chapter 11 reorganization represents the best solution, there are many businesses for which the best solution may be a non-judicial resolution.

Business leaders will find that they get  the best results  and the highest return on investment when they work with their professionals to develop the strategy that best fits their unique situation


Yes, Yes, Thank You – But No.
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