Articles Tagged with business bankruptcy

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When a business becomes unable to meet obligations such as employee salaries, day to day invoices, and bank debt, management may turn to Bankruptcy law to liquidate or reorganize. As a rule, Courts prefer reorganization over liquidation, provided reorganization would be viable, preserve jobs, keep assets productive, and enhance the local economy. To begin with though, the question of whether Bankruptcy is the best way to deal with business challenges depends on several factors, including:

  • The form of the business (sole proprietor, partnership, corporation, LLC, etc.)
  • Whether the person(s) behind the market are also personally liable for debts
  • The number, amount, and type of debts that were incurred by the company
  • Whether it makes more sense to close the business or to keep it running

There are three basic types of Bankruptcy available for businesses: Chapter 7 liquidation, Chapter 11 reorganization, and Chapter 13 reorganization for sole proprietors. Continue reading

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Everything Was Going Fine Until…

Your customer or borrower has been paying like clockwork and you, the creditor or vendor, have been dispensing goods and services as promised. Then your customer starts to pay a little later, then later still. Why not? Times are tough. So you do the decent thing and take their payments without complaining. Next thing you know, your customer seeks bankruptcy protection, leaving you holding the bag for thousands, tens of thousands, even hundreds of thousands of dollars worth of goods and services. Money you’ll never see again. 

The Worst Part Is (Not) Over

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Midwest Generation was established in 1999 as a holding company for coal-fired power plants in Illinois. By this summer the company had purchased 6 such plants from from ComEd including: 

  • Will County power station, Romeoville
  • Fisk and Crawford stations in Chicago
  • Waukegan power station, Waukegan
  • The Joliet power station in Joliet, and 
  • The Poweron power station in Pekin

This company started out with high hopes and innovative ideas for the development of what has come to be known derisively as clean coal: high grade, low-emission power creation that would be coupled with better returns for the battered coal industry. But like every business emerging in the shadow of big-coal, Midwest Generation lost momentum as pro-coal legislation stalled. Now it looks like the economy has dealt it a death blow.

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