Many companies that file for business bankruptcy may not get to experience what it is like to come out the other side of the process in better financial shape than they went in. If a business owner chooses to pursue a Chapter 7 bankruptcy, that will usually mean that the company plans to close down after any and all assets are sold off to satisfy debts. However, when a company goes through a Chapter 11 bankruptcy filing, many times the company is able to emerge once the process is completed and carry on with business.
This appears to be what will take place for Cengage Learning, Inc., a large American textbook publishing company. The company filed for Chapter 11 bankruptcy back in July of last year, and a recent report indicated that the company has taken all the right steps in the process, culminating in approval of a proposed plan to exit the bankruptcy process by the end of March.
When the decision makers at Cengage decided last year that filing for Chapter 11 bankruptcy was the way to go, the company was carrying a heavy debt burden. Now, with a debt reorganization plan completed, along with new financing being secured, the company will be striving for profitability in an ever-changing education market.
Contrary to what the news media may have business owners believe, a Chapter 11 bankruptcy filing is not "the end of the world." Just like with an individual bankruptcy, companies can choose bankruptcy as an option when debt relief becomes an obvious need. Through the Chapter 11 process a company can make a plan for streamlining business operations, consolidating debt and charting a path back toward a successful - and profitable - business model.
Source: The Wall Street Journal, "Court Approves Cengage Bankruptcy-Exit Plan," Stephanie Gleason, Mar. 13, 2014