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When a Chapter 11 filing is appropriate, it can truly breed success

We note a quick truth on our business law website for commercial enterprises eyeing a Chapter 11 bankruptcy filing as a viable strategy to overcome daunting financial and legal challenges.

And that is this: Although filing for corporate bankruptcy might well be an optimal response for an embattled business, "it is not always the only option available and should not [uniformly] be the first alternative."

When proceeding with Chapter 11 is a reasonable approach, though, it can help achieve an outcome for an entity that makes strong sense and truly does reflect a "best-case" strategy for reorganizing.

In a given case, that might mean shutting down business operations in an effective way. In other instances, reorganizing through Chapter 11 can materially reduce troublesome debt and enable a company to continue operating profitably.

As a recent news account reports, that requisite groundwork appears to have been laid for one communications company. Avaya is a previously private entity that has just emerged from Chapter 11 as a public company with a "significantly strengthened balance sheet."

Clearly, company principals are happy with the results and optimistic about Avaya's future prospects following the completion of debt restructuring.

The company's CEO states that Avaya was able to shed about $3 billion in debt obligations. Additionally, the company emerged from bankruptcy with $300 million-plus in assets to fund future growth.

By all indications, Chapter 11 turned out to be a strong restructuring tool enabling Avaya to save its business and have reasonable expectations for continued company success in the future.

Any New York business entity seeking information on Chapter 11 or other potential debt-relief strategies can contact Rich Michaelson Magaliff Moser, LLP, for prompt and proven legal guidance.

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