Mickey,
Chapter 11 is a very complex process. I am not an expert, but I am learning a lot as part of CPRKSA and the ESHC. Let me try to help. This is all IMO. I am not a lawyer or expert in Chap. 11.
In most Chapter 11's, the shareholders get wiped out when the reorganized company emerges - in much better shape than it entered Chap. 11.
Here is my take on what goes on. The debtors and creditors get rid of the shareholders and they end up owning at least part of the "new" company as it emerges in a healthier condition ("Ah. It's a profit deal."). What often happens is that the creditors will give up their debt in exchange for some ownership in the newly reorganized company, the debtors get some ownership in exchange for their "leadership", and whoever is financing the POR will get the rest of the ownership. The company then comes out of Chap. 11, they do well and the "new" ownership does an IPO. In a successful IPO the "new" owners sell a bunch of their shares, pocket a lot of money and skip all the way to the bank (IMO).
I believe that is what would have happened (and don't get me wrong, it still could happen) with CPRKQ. But this is why I started CPRKSA and why the CPRKSA steering committee and I worked so hard to get an ESHC approved in this case. The shareholders now have a voice in front of the judge in this case and it is our job to try and prevent the above scenario from playing out. The key thing here is to prove that the company is worth more than all of its debt. If the company is not worth more than all of its debt, then there is "nothing left to own" and the shareholders will be wiped out. (I believe that is part of the reason why the debtor's initial valuations of the company were so palrty.) But, if we can prove that there is something left after the debt then we can fight to not be wiped out. As part of the rare POR in which the shareholders are not wiped out, their shares may still be diluted and there are a multitude of different ways that could happen. Some of which include the creditors take some equity in the new company in exchange for what is owed to them (thereby reducing the debt load), the financing company takes a piece of the pie for the money they invest to get the company out of Chap. 11, etc.
What I am trying to do as part of the ESHC (I am not the chairman of the ESHC so I can only speak for myself) is to make sure that the shareholders are in the money and that we are not wiped out in the process. And as ChuckD has said in his posts, the ESHC continues to make progress (refer to his update posts), but it is not a done deal at this point in time. I feel we have made a lot of positive progress but we still have a lot of work to do.
FFF
Frank Firek
AI
