Replies to post #3221 on Windstream Holdings Inc. (fka WINMQ)

[Canieatthis]

Not worried because I started buying in March ;-)

Chapter 11 bankruptcy is a bankruptcy option that is typically available to large corporations. This type of plan often referred to as a debt reorganization, is favorable for businesses because it allows them to keep running and making a profit while paying off their debts. There are many positive aspects of the plan, and a few negative elements to consider when weighing the different bankruptcy options. Below is a brief overview of the pros and cons of declaring bankruptcy under Chapter 11.

Pros of Filing Chapter 11 Bankruptcy

As previously stated, this type of bankruptcy gives the debtor a chance to reorganize debts. After filing a Chapter 11, the bankruptcy court issues an automatic stay that keeps creditors from attempting to collect repayment from the business. While the automatic stay is in place, the debtor works on a repayment plan.

A chapter 13 bankruptcy lawyer can help you make a plan that typically includes reduced amounts owed or reduced interest rates.

Meamnwhile, the repayment plan under Chapter 11 is called a reorganization plan. The business’s goal is to stay profitable while paying back debts, so they try to renegotiate contracts, leases, or other debts in order to get amounts reduced or discharged. Creditors are generally receptive to the repayment plan because they often get a payment plan that is more favorable than what they would get under Chapter 7.

Under the reorganization plan, creditors are placed in different classes with different priorities. Those that are the first priority would include state or federal tax agencies and unpaid employee wages or stock options. Each secured creditor is placed in its own class, and unsecured creditors are collectively placed in one class. Once the plan is confirmed by the court, the debtor is required to make all the payments to creditors as outlined in the reorganization plan.

Cons of Filing Chapter 11 Bankruptcy

While there are many benefits to Chapter 11, the biggest one being that business can continue to operate, there are some cons as well. A Chapter 11 bankruptcy is a long and costly process, which can be hard for businesses struggling to stay afloat. While it doesn’t force them to sell assets, it can cost them plenty in filing fees and legal fees. After their plan is confirmed, they will be paying off their old debts for a number of years.

In addition, the reorganization plan they develop must be feasible and approved by the bankruptcy court. Sometimes businesses have difficulty figuring out a way to get their company out of debt.