While filing for bankruptcy is never an easy decision, it sometimes becomes essential in order for a company to remain in business and attempt to turn around its financial misfortune.
QUEENS, N.Y. (PRWEB) March 09, 2018
When big companies file for bankruptcy, people often wonder why once-successful corporations choose this method of debt reconciliation and financial protection. Recently, Bruce Feinstein, Esq., a bankruptcy attorney with two decades of reorganization bankruptcy experience, discussed the case of Remington filing for Chapter 11 in February of 2018.
After facing slumping sales figures over the past decade as well as negative attention and expensive fees from lawsuits related to the 2012 Sandy Hook massacre, Remington, the nation’s oldest gun maker, had acquired a debt of over $950 million to its creditors. On February 12, 2018, the private equity firm Cerberus Capital Management, which owned Remington, submitted a prepackaged reorganization plan as part of a case filed with U.S Bankruptcy Court of Delaware under Chapter 11 of the bankruptcy code on February 12, 2018, relinquishing ownership of Remington to creditors in exchange for reducing its debt by $700 million and increasing its capital by $145 million.
“While filing for bankruptcy is never an easy decision, it sometimes becomes essential in order for a company to remain in business and attempt to turn around its financial misfortune,” Mr. Feinstein explains. “Rebuilding after filing bankruptcy requires a concrete plan of action and a successful revenue model for the future, a way to pay back debts and start making profits again.”
According to Fortune magazine, Remington filed for Chapter 11 in order to take back control of their finances. Remington’s finances had been spiraling for the last decade, and “in the first three quarters of 2017, Remington’s sales fell 27.5% to $466.7 million, pushing it into the red.”
By agreeing to relinquish control of equity in the company and submitting a comprehensive plan for reorganizing the company and its business model, Cerberus is allowing Remington the chance to reestablish itself in the industry, even when the industry is at one of its lowest points in recent years.
Mr. Feinstein also uses this article to explain how Chapter 11 bankruptcies work for corporations, small businesses, and even individuals. “Filing for Chapter 11 begins with filing a petition with the bankruptcy court,” Mr. Feinstein explains, “which includes filing fees and several documents including standard information about the debtor's name, tax identification, Ultimately, a plan of reorganization must be filed as well.”
Filing for Chapter 11 is a complicated process, but doing so allows for businesses and individuals to establish feasible repayment and reorganization plans with their creditors and the Court in order to get the fresh start they need to recover financially. With the proper legal counsel, the right information regarding filing proceedings, and a steadfast resolve to overcome financial troubles, filing for Chapter 11 can ultimately save a business.
The Law Offices of Bruce Feinstein has nearly two decades of Chapter 11 bankruptcy law, helping families, individuals, and small businesses resolve their financial issues and move forward with their careers. Visit bfeinsteinesq.com for more information or call (718) 514-9770 to reach the New York office.