When a business contemplates filing for bankruptcy protection, the decision can weigh on both the company and their partners heavily. In some instances, a business bankruptcy can be the beginning of a major turnaround, providing the means by which a company can streamline operations, get rid of unproductive practices and slim down an asset portfolio. For others, a bankruptcy can be the beginning of the end for the company, with nothing left to do but sell off assets and apply the proceeds toward the company's debt obligations. Either way, a business bankruptcy can be a long and complex proposition.
The decision makers behind one California-based company have likely gone through this thought process recently. Edison Mission Energy, which is part of the larger company of Edison International, recently filed for Chapter 11 bankruptcy. Edison Mission Energy, a unit of the company which dealt mostly with energy generation, filed the Chapter 11 petition on December 17. According to the filing, the company listed assets of $5.13 billion and liabilities of $5.09 billion.
In a Chapter 11 filing, a company may file and then begin the process of drawing up a plan for reorganization of business operations, as well as beginning negotiations with creditors on how to deal with the company's debt. However, some companies, and Edison Mission Energy appears to be one of them, will file with a plan already in place. The plan for this company calls for Edison International to transfer the company stake to unsecured creditors.
Although our California readers may see the frequent news reports about long, complicated bankruptcy proceedings for some companies throughout the nation, this does not always have to be the case. In order to ensure that a company bankruptcy goes as planned, it is important to consider all of the legal elements that such a filing would entail. Only then should a decision be made on how to proceed.
Source: Los Angeles Times, "Edison International Unit Files for Bankruptcy Protection," Dec. 17, 2012