Spongetech Delivery Systems, Inc. (fka SPNGQ)

[starfire]

patchman, normally speaking I do not spend my time answering trivial business questions but I will anyways, this time.......

1. they operate at a loss so there is no way to use future profits to pay down past debt.

That's a major assumption on your part. The financials are not known i,e the total picture. Just known are some bits & pieces stitched together by the SEC!! Even if they operate at a loss for the current period, with new WC and proper money management, management (new) can generate high growth revenue and profits. They have a huge product portfolio which they can leverage. this is not a capital intensive operation.

2. since the asset is the manufacturing plant, and the plant is needed to stay in business, why would the courts put the rights of a losing business over the rights of creditors?

The operational liabilities currently owed is not something big....the future cash flow can easily pay them off. In fact with tactful negotiations short term WC/debt can be used to pay them off. Hence the court can stay the MFG plant provide they put up a practical pay off plan. Besides if the court decides to sell the plant so be it, it is not a great loss as the MFG plant only produces the sponges. The molds belong to SPNG and MFG can be easily outsourced. I believe most of the soap infusion and packaging is done at the warehouse.

3. exactly what plan can they produce in which they can prove a profitable business considering NOBODY will touch them as a business?

Well, there are lot of geniuses around!! I don't think Wayne CElia is the only Genius!!! LOL!!

4. Shareholders get zilch either way. Too many shares, too much debt owed.

SPNG does not have debt on their balance sheet. Current creditors are operational type and they get paid off from operational cash flow. So current shares holders will stay. they may be dilution in paying off some of the current creditors but can be a minimum.

Bottom line.... the option of allowing the business to continue far exceeds the value of immediate liquidation. One has to just sit down and calculate NPV over a 5 yr period and make a cogent presentation of the plan.