Good question . We can be reasonably sure that Spongetech has legal counsel . Any Law Firm would know that no company , private or public , can be ' protected ' under a Chapter 11 if there are fraud convictions .
If Spongetech were to try a Chapter 11 with the faint hope of being allowed to continue business operations I think the SEC would convince the Judge to enjoin the BOD from conducting any operations whatsoever because of the fraud charges , and to move the Chapter 11 to a Chapter 7 whereby the Trustee would likely be directed by the Judge to seize everything .
It would be a high stakes gambit for Spongetech to try a Chapter 11 , and IMO such a move would backfire and then the Chapter 7 Trustee would have all of the company's books , etc , by seizure . The last thing Spongetech would want is for their books to be opened and for them to lose control ....whatever control they still have left .
Rock and a hard place , n'est-ce pas ?
Renee
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