Business bankruptcy is not always solely about debt. Sometimes companies see bankruptcy as an opportunity to solve their financial issues, while planning for future profits. Those affected may see business bankruptcy as a means of achieving success.
One Tennessee energy company recently filed for Chapter 11 bankruptcy protection. At the same time, they have indicated that a Chinese company is prepared to invest $6 million in exchange for a 30 percent stake in the financially troubled company.
Americas Energy Co. is headquartered in Knoxville and has a coal-mining operation in southern Kentucky. The company has assets between $500,000 and $1 million, and liabilities between $1 million and $10 million.
The agreement with the Chinese investor is dependent on the Tennessee-based company acquiring assets from a Virginia company known as Alpha Natural Resources for $71 million. Alpha Natural Resources assets consist of around 44,000 acres of leased property, as well as two deep mines and a coal processing facility. Written agreements are in place between AEC and the Chinese investor, as well as with the Virginia based company.
It appears that the Chapter 11 bankruptcy filing by the Tennessee company is part of an overall financial plan to dispose of some of its assets in Kentucky under the orderly supervision of the court, while reorganizing its debt and financial structure. The potential result is a company that used Chapter 11 to confront its outstanding issues, while becoming a stronger and more economically viable business.
Chapter 11 bankruptcy is often a good option for businesses that are struggling financially. In many cases, businesses are able to continue running while they reorganize their debts, and create a plan for future financial stability.
Source: Knoxville News Sentinel, “Knoxville coal company files bankruptcy; attracts Chinese investors,” Josh Flory, Dec. 15, 2011