Many people do not have as much discretionary income to spend as they did previously, which can have a large impact on businesses. Without as many sales as usual, some companies are struggling to stay afloat, and many are closing their doors from falling into mounting debt. Some New Jersey companies may discover that filing for Chapter 11 may be a great way to restructure and get back on track. One company recently found a way through Chapter 11 to do just that.
Just 81 days after filing voluntarily for Chapter 11, The Dolan Company and its affiliates — also known as the “Company” — announced that it made its way out of bankruptcy protection. The bankruptcy court confirmed the Company’s plans to reorganize and that the Company’s lenders now have ownership of Dolan. During the reorganization process, the Company was able to restructure its balance-sheet with the secured lenders and make huge strides in the ways that the capital is handled. Over the course of the restructure, DiscoverReady LLC — which was previously Dolan’s e-discovery business — became established, independently owned and operated.
The court granted a settlement between the Official Committee of Equity Security Holders, who handled the Chapter 11 case, and the Company. As part of this settlement, the Company is required to transfer approximately $3.2 million in cash and a promissory note that will go into a trust for the Company’s preferred and common stock holders. Those who have the preferred stock will receive about 20% of the money, and the remainder will be given to those who own the common stock. Both Dolan’s common and preferred stock are cancelled.
Although it may be a difficult decision, filing for Chapter 11 can allow for a failing business to get back on its feet. The restructuring process can help a New Jersey company breach a better financial position for a suitable buyer. With a lot of effort and hard work, filing for Chapter 11 can be a means for a struggling company to come out on top and become stronger than ever.
Source: ABL Advisor, “The Dolan Company Emerges from Chapter 11 Bankruptcy Protection“, , June 13, 2014