Question

Do you agree with below paragraph? Why or why not ? write 200-250 words and gives examples .

A bankrupt company reform its debt criteria except going with any business with the reorganization process. When reorganization starts, the debtor companies usually retains ownership of all the assets and continue with the business process. Basically, when a company face with the financial problem and scared of paying for loan payment, then they want to go for a reorganization process for paying its debt and loan payment to continue the business process smoothly. In a liquidation the creditor have more priority and they seize the debtors for any business and operations. Liquidation is the worst process as after these company does not belong to the market.

Because of the pandemic situation of 2020, bad luck came on many companies. I want to talk about the most well-known, budget friendly clothing departmental store who are in the market last 118 years J. C Penny. On Friday 2020, J. C Penny files for the bankruptcy protection as the company said they had gone for a deal which will help them with reducing several billion dollars. This biggest companies have more than 800 stores, but they will close approximately 180-200 stores with some of the locations. The company missed its debt payment around $12million to its bondholders and $17million in its credit line in April 2020 because Coronavirus. The company filled for the chapter 11 protection which I think clearly indicating that they are getting a limited amount of time in which they could restructure the debt and I hope they could come back to a stable situation. The advantage of this chapter 11 is that they could easily avoid the creditors during this time. For the J. C Penny, they are going for 900million in financing form its existing lenders to fund bankruptcy which will have $450million of new money and nearly $500 million in cash on hands.

For my Judgement filling chapter 11 for bankruptcy can be turned into a good deal if J. C Penny become successful it will continue operating in an efficiently way with some new debt. It was continuously indicating for Chapter 11 Reorganization process when they were uninterruptedly missing the loan payment. Also with these steps they could get the advantages form its creditors and taxation facilities.

Answer 1

I agree with the below paragraph. Chapter 11 is a form of bankruptcy in which there will be a reorganization of a debtor’s debts. Besides debt there will also be a reorganization of that company’s (which is a debtor as it owes money that it had borrowed and that has to be repaid) business affairs as well as assets.

In the case of J.C. Penny chapter 11 will work well for it as it will allow and enable J.C. Penny to get a fresh start after restructuring their debts. J.C. Penny will, however, be subjected to the terms as per its fulfilment of its obligations under the reorganization plan.

J.C. Penny, in the midst of filing Chapter 11, will be able to continue to operate. As J.C. Penny is not involved in fraud, dishonesty or gross incompetence that has led to this situation the court will allow it to continue to operate its business. J.C. Penny has a very good chance of coming out of this provided it is able to develop a proper reorganization plan and is able to downsize its business operations so as to be able to reduce its overall expenses and costs. It will also be able to renegotiate its debts in terms that will be more aligned with its reorganization plans.

To conclude chapter 11 will allow J.C. Penny to emerge from bankruptcy as a company that is sustainable both financially as well as operationally.

(240 words)