An interesting article in a national publication stresses the importance of timing for many would-be commercial bankruptcy filers in New York and elsewhere.
That piece notes “the trend of retailers that are filing for Chapter 11 bankruptcy reorganization while still profitable.”
Although the recent spike in entities that seek court protection while still being in the black might seem illogical, it can actually make great sense in select instances, say commentators on reorganization.
And it highlights “the importance of pre-emptive action for retailers that foresee impending doom” notwithstanding still profitable balance sheets.
Consider a case where a national chain’s operations continue to generate profits, while company accountants point to certain future demise owing to an inability to stay a step ahead of creditors.
In such a case, says USA Today in its Chapter 11 focus, it can make more sense to get proactive in bankruptcy from a seeming position of some strength rather than “waiting to fall into serious red ink.”
That comes with a caveat though, which we have underscored for readers of our business blog in some past entries. Namely, we stress at R3M Law, LLP that Chapter 11 is but one potentially viable option among many others that might be worth pursuing for a financially challenged business.
What might work best for a company seeking to either liquidate on optimal terms or reorganize in leaner, more streamlined fashion can best be determined through close counsel with proven attorneys.
A business law firm having a demonstrated history of successful advocacy on behalf of diverse clients can help craft a strategy that makes strong sense for responding to future challenges and opportunities
