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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 o
by 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 agoWhat 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 agoYou can in theory, but compared to the millions owed in total you are nothing.
- titanomachy 6y agoSince 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.