Replies to post #325389 on Spongetech Delivery Systems, Inc. (fka SPNGQ)

[loanranger]

OK, now the other questions make sense :o)

I'm sure you know all this:
In a typical voluntary chapter 11, the mgmt/BOD is facing a liquidity crisis that they can't solve by borrowing, issuing shares, etc. Chap 11 essentially allows them to stop the clock, preventing current creditors from filing suit or otherwise collecting what's due them. They take whatever's available to them asset-wise and propose a plan to pay them off. If an agreement is reached, whatever funds are there to distribute are distributed. Typically the existing common becomes valueless unless the conversion of some of those old assets allowed the creditors to be made whole, basically allowing the company to re-organize and go forward as it was, but with a cleaned up balance sheet. That's rare. More often than not, in order to tempt the creditors into taking less than their whole dollar, they are issued new shares in the "new" company and the old shares are kaput.

The only reason that I can think of for the filing in this anything-but-typical situation is that Team Musty thinks that it might allow them to keep their main asset down in Georgia......since it appears to be trying to escape. Frankly, even that doesn't make sense to me given the history of disinterest in actual operations. More likely it is some kind of stall tactic. Why, I can't imagine. If I was them I'd be looking to get the whole deal over with, maybe covered up by a piece of canvas in the back of a pickup somewhere around the US/Canada border.

Best I can do.