When a chain files for Bankruptcy?

[danfifepsu]

When a Chain files for Bankruptcy in Chapter 11, how do the pay off its debt and creditors???

For Chapter 7, I know it's liquidation, but what makes it determine that route.

[esw01407]

What you've asked is not a straightforward question.

1. The debt holders could take large ownership stakes in the company, trading the debt for shares, basically replacing the current owners.

2. Company could consolidate and re-finance the debt at lower levels, making it more manageable.

3. Parts of the company could be sold off that are not considered core to operations, without closing the whole business down.

4. A buyer could come in, buy the company, and they would assume the debt. The company could be merged, dismantled, etc.

5. In the case of Ames, as we know from many posts on this forum, not everyone gets paid back. .20 on the dollar might be lucky in some cases. That then becomes a tax issue, can it be wrote off? We also know it can take years or decades to sort out land being sold off, etc. Separate from this point, there could also be legal action by the debt holders if there was negligence.

There is no one formula that would be used.

[retailisking]

In the case of the Bon-Ton bankruptcy, second-lien bondholders are pushing for liquidation because the chain's prospects for restructuring are so bleak and unsecured creditors are at the back of the line when it comes to recovery. In the infamous W.T. Grant case, a consortium of banks held the chain's fate in its hands and timed the bankruptcy and liquidation for their maximum benefit.

[danfifepsu]

In the case of the Bon-Ton bankruptcy, second-lien bondholders are pushing for liquidation because the chain's prospects for restructuring are so bleak and unsecured creditors are at the back of the line when it comes to recovery. In the infamous W.T. Grant case, a consortium of banks held the chain's fate in its hands and timed the bankruptcy and liquidation for their maximum benefit.

one fact is MOST chains get dismantled in the process (Will Toys R us?). Like Caldor they filed Fall 1995 and gave up January 1999, feeling there was no OTHER choice. and the creditors pushed for a liquidation.