Considering the circumstances this BK is the best move Marcus could have made. Many of us did not think he had the gumption to pull it off.
Look at it this way stockholders.
1. The company is broke. They have no capital nor any way of getting any because all of their assets are "mortgaged" to the hilt. However, if they can get into production those assets have a much higher value than the aggregate amount of debt.
2. The 1st trust deed holders who are the biggest problem are pursuing an NOS that will, if allowed, strip the company of almost 100% of its assets.
3. A Chapter 11 BK buys time and makes the company more attractive to possible financiers because those financiers can gain a superior position to all other creditors (subject to judicial approval).
4. The judge can approve a payout plan that may allow the company (assuming it can get into production) to spread out payments over a long period of time which could make the debt more workable. And, the judge may even give a "haircut" to lenders whom he feels might receive "undue enrichment." (That may be a tough one in Utah as Utah has no usury laws at all - especially for businesses).
5. MD, MS, Barlow & McMullin all are large stockholders. They may have some incentive to protect the shareholders not only out of "moral obligation" but also because of self-interest.
6. A BK is a legal way of cleaning up the mess of debt and liabilities which may make the company (and its assets) more attractive as a merger or acquisition candidate. A lot depends here on what happens to the leases and land holdings with the BK - some may go away others may not - it depends on the terms MD negotiated but since they went the route of BK I think we can assume management believes they can hang on to most of the assets.
7. Bk throws a wrench into the PN lawsuit. It may not be major but it will need to be addressed before that lawsuit can go forward.
8. DIP financing may be obtained at better terms than the existing debt and far better than the Hard Money MD took when he started this deal.
9. They may finally have some real professional management (I hope).
Overall my vote is that MS did the right thing with this BK. Will it be good for common shareholders? Who knows? But I, like some others who have posted here today, have made money by investing into BK's. An example is the K-Mart BK a few years ago (I know CPRK is not K-Mart). The stock went to pennies but the underlying real estate had value that most investors did not recognize. Those who bought cheap rode the stock all the way up to around $23.00 per share. Fantastic returns!
All is not lost in CPRK as long as management is willing to do all they can to protect their integrity and watch out for stockholders.
