Bankruptcy Chapter 11 Ends in successes. Here we see that A123 Systems filed bankruptcy. Now they are out of bankruptcy.
With a successful Chapter 11 Plan, this company was able to reorganize and move forward.
Factor Allowing The Bankruptcy Chapter 11 Plan to be Successful.
The plan did not include $130m worth of government grants A123 received. The Obama administration attempted to kick-start the market for electric vehicles and advanced lithium-ion batteries by providing large government grants to businesses. A123 was awarded a $249m grant via the Department for Energy and the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. However, the company only drew around $132m of the grant in order to build two plants in Livonia and Romulus, Michigan. The company had intended to hire around 6000 workers for these two plants but only around 1000 were employed.
Background on Filing:
When A123 Systems, a company that makes lithium batteries for use in automobiles, filed for Chapter 11 bankruptcy, employees worried about what this would mean in terms of their jobs. A123 has not said anything regarding layoffs; however, it did receive interim court approval to use part of its $72.5 million financing from Johnson Controls to pay employee wages, salaries and benefits. https://money.cnn.com/2012/10/16/technology/a123-battery-bankruptcy/index.html
A type of bankruptcy that is open to: businesses and some individuals However, it is usually taken advantage of by businesses. This type of bankruptcy allows a business to stay open, reorganize its finances and even get additional funding. In A123’s case, Chapter 11 is allowing it to make several financial deals in order to get the money it needs to get out of debt and keep running the business. A123 obtained the following sources of funding:
- $72.5 million from Johnson Controls, Inc.
- $465 million from Wanxiang Group.
The interim court determine what A123 could do with the financial help it received from these sources.
The Delaware court’s decision was a relief to international suppliers. A123 does a lot of business overseas. Suppliers in China and other foreign countries were concerned about how they were going to get paid. The court’s decision helps ensure that A123 can pay its non-US suppliers. After the court’s decision was announced, A123’s shares of stock went up by 12 cents. Presumably because of increased confidence in the business’ ability to overcome its financial problems and thrive.
Although A123 is a business, individuals may be able to take advantage of a similar process to the one A123 went through in order to declare personal bankruptcy. Bankruptcy protection can allow individuals who are overwhelmed by debt to protect their assets, pay off a portion of their debts and start their financial life over. Debtors who are struggling with substantial amounts of debt may want to take advantage of this option.
Bankruptcy Chapter 11 May Be An Option for You or Your Business
3 Bankruptcy Chapters: https://njbankruptcylawfirms.com/
- Chapter 7
- Chapter 11
- Chapter 13
Chapter 13 bankruptcy is similar to Chapter 11 bankruptcy for businesses like A123. Individuals who owe millions of dollars may take advantage of this option. Many individuals file for Chapter 7 bankruptcy liquidating debts. There is also Chapter 13 bankruptcy, which allows individuals to enter a structured repayment plan to resolve debts. The debts are resolved over the course of three to five years.
Individuals and businesses considering bankruptcy should see a bankruptcy lawyer to ensure everything is filed correctly and to increase the chances of a satisfactory outcome.
Call today for a free bankruptcy consultation. I provide expert bankruptcy advice and protection.
When meeting with you, I recommend the type of bankruptcy that is best for your particular situation. My goal is to provide expert bankruptcy advice so you can move forward.