Bondholders Negatively Impacted by Chapter 11 Filing

The way in which a holding company is planning on filing for bankruptcy could seriously affect bondholders, but not parent-company shareholders.

Earlier this month the parent company announced that it was filing for Chapter 11 bankruptcy. A quick review of the paperwork revealed that the bondholders are likely to make out with nothing once the bankruptcy has been completed. The way that the attorneys presented the bankruptcy filing, the parent company shareholders are likely to retain their stakes while the bondholders will be left empty-handed. This came as a surprise to those following the case since it flies in the face of normal bankruptcy filing procedure.

In most cases, the company is forced to pay back creditors first, leaving bondholders and shareholders with nothing. In this case, if the company is successful, the shareholders will actually get a stake in the bankruptcy filing. But with more than $5 billion in debt, it is uncertain just how much of the pie will be allotted for the shareholders.

Need assistance with your Chapter 11 filing in Texas? Contact the Malaise Law Firm today to discuss your case with a San Antonio bankruptcy lawyer who has experience with business re-organizations.