The recession that began in 2008 continues to claim business victims in Camden and throughout New Jersey. While some say there are signs of an economic recovery on the horizon, those companies that continue to struggle sometimes find it in their best interests to seek the protection of a bankruptcy filing. Much like Chapter 13 for individuals, a Chapter 11 bankruptcy allows a business to submit a proposed plan to reorganize its entity and create a payment plan. If approved, the result can be a company that emerges from bankruptcy leaner and more competitive.
On Feb. 17 a New Jersey voice and data services provider for businesses filed for Chapter 11 bankruptcy protection. The chairman of Wave2Wave Communications Inc. indicated the filing was made in the best interests of the company in light of its current financial situation. After listing both assets and debts of up to $100 million, Wave2Wave will now presumably file a plan with the court to restructure its business. The filing was apparently necessary because Verizon Communications Inc. had indicated it was prepared to shut off service to the company.
The Chapter 11 petition will likely offer the Hackensack-based company some breathing room as it prepares to submit its reorganization proposal. In the meantime, creditors like Verizon will be held at bay until further action of the bankruptcy court. The design of a reorganization proposal is to allow a company to continue business operations as it devises and implements a court-approved strategy to ultimately emerge from bankruptcy as a stronger and financially viable business.
Source: Bloomberg.com, “Wave2Wave Communications files for Bankruptcy protection,” Dawn McCarty and Phil Milford, Feb. 17, 2012