Sometimes companies fall onto hard times and end up with large amounts of debt. But hard times do not always signal the end for a company. Sometimes bankruptcy can help the company restructure its business and create new long-term goals. That is what Tennessee medical transcription company M*Modal is hoping to accomplish after filing for Chapter 11 bankruptcy.
Chapter 11 bankruptcy is used mostly by large companies, but some smaller businesses may also find this type of business bankruptcy useful. Chapter 11 helps companies with huge debt to find ways to become profitable again. These steps may include finding ways to increase revenue or cut costs, such as through employee layoffs or doing away with non-profitable departments. Chapter 11 bankruptcy can be expensive and time-consuming, but it also offers many benefits.
M*Modal filed for bankruptcy this March. The company has cash on hand to continue operating as usual during the bankruptcy proceedings and it is currently communicating its strategies with bondholders and lenders. M*Modal, which was bought by One Equity Partners in 2012, plans to use the bankruptcy protection to assess the market and adapt accordingly. It also wants to position itself for long-term growth and success.
In a Chapter 11 bankruptcy, the goal is for the company to restructure itself in order to become profitable. This involves not only coming up with a solid plan, but also working with lenders to pay off debts or at least negotiate with them. Some debts may even be discharged through the process. Creditors will often work with companies so they can receive at least some of the debt owed to them.
Source: The Tennessean, "M*Modal files for bankruptcy protection," Shelley DuBois, March 20, 2014