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So they continue operation as usual? I don't understand this chapter 11 thing. Also read this week that Norwegian Airlines applied for something similar but con

So they continue operation as usual? I don't understand this chapter 11 thing. Also read this week that Norwegian Airlines applied for something similar but continue operating. Can someone explain how come companies can file for bunkruptcy but continue operations?

titanomachy 6y ago
When a company files Chapter 11 bankruptcy, they acknowledge that they are unable to pay their debts under their current structure. They propose a plan to pay off their debts which the courts (and possibly their creditors?) must approve. Usually the company is more valuable as an operating business and has a better chance of paying off its debts that way, so it's in everyone's interest for the company to keep operating. The creditors get some say in how the company is run at this point, though, and they may demand that the company sell off some assets to help pay the debt. https://www.investopedia.com/terms/c/chapter11.asp https://www.investopedia.com/terms/c/chapter11.asp
- xster 6y ago
  What about consumers they owe money to? Are they "creditors"? e.g. if you had "credits" from prepaid lessons, gift cards, sold gear etc, can you not get money back from them anymore until all their other creditors split the new loot first?
  - bluGill 6y ago
    You can in theory, but compared to the millions owed in total you are nothing.
  - titanomachy 6y ago
    Since the company is still operating, they should still be able to provide the services that you’ve paid for so they haven’t breached their contract with you yet.
chihuahua 6y ago
Bankruptcy is a legal status/process for handling a situation where a business is about to run out of money. The purpose of this process is to save the business, so that creditors can receive what the business owes them, and to prevent unnecessary harm due to chaos that might erupt. So in a way it's the opposite of a situation where the business just stops operating immediately. In a successful chapter 11 bankruptcy, several parties lose some money, but the business survives and can continue operating. That's the goal and purpose of why "chapter 11" exists in the first place.

titanomachy 6y ago

When a company files Chapter 11 bankruptcy, they acknowledge that they are unable to pay their debts under their current structure. They propose a plan to pay off their debts which the courts (and possibly their creditors?) must approve. Usually the company is more valuable as an operating business and has a better chance of paying off its debts that way, so it's in everyone's interest for the company to keep operating. The creditors get some say in how the company is run at this point, though, and they may demand that the company sell off some assets to help pay the debt. https://www.investopedia.com/terms/c/chapter11.asp https://www.investopedia.com/terms/c/chapter11.asp

xster 6y ago
What about consumers they owe money to? Are they "creditors"? e.g. if you had "credits" from prepaid lessons, gift cards, sold gear etc, can you not get money back from them anymore until all their other creditors split the new loot first?
- bluGill 6y ago
  You can in theory, but compared to the millions owed in total you are nothing.
- titanomachy 6y ago
  Since the company is still operating, they should still be able to provide the services that you’ve paid for so they haven’t breached their contract with you yet.

chihuahua 6y ago

Bankruptcy is a legal status/process for handling a situation where a business is about to run out of money. The purpose of this process is to save the business, so that creditors can receive what the business owes them, and to prevent unnecessary harm due to chaos that might erupt. So in a way it's the opposite of a situation where the business just stops operating immediately. In a successful chapter 11 bankruptcy, several parties lose some money, but the business survives and can continue operating. That's the goal and purpose of why "chapter 11" exists in the first place.