Nobody starts a business with the idea that it will one day face financial difficulties. However, this is a very real problem for many organizations. For some, closing up shop is the only answer. Others, however, consider additional strategies, such as Chapter 11 bankruptcy, in hopes of finding their way back on the right track.
Genco Shipping, headquartered in New York, has recently emerged from Chapter 11 and is now on the path to a better future.
According to the company, the business bankruptcy worked out in the long run, saying that it helped reduce debt by more than $1 billion, while eliminating annual interest payments of $40 million and amortization payments of $192.8 million.
This process did not take too long, with Genco Shipping first filing for Chapter 11 protection in April. It was then that the company noted its large amount of debt and desire to reduce it while restructuring at the same time.
On top of reducing and eliminating debt, the bankruptcy filing allowed the company to receive $100 million in new money via a rights offering.
After the company ran into hard times, when revenue decreased by approximately 50 percent, business bankruptcy appeared to be the best option for the shipping company.
This story shows that filing for bankruptcy as a business is not always a bad thing. Making this decision can be beneficial on many fronts, and Genco is finding that this is the case. It is a process that includes a lot of paperwork but in the end, the benefits are often too many to pass by.
Source: Source: BND, “Genco exits Chapter 11 bankruptcy protection,” No author given, July 9, 2014by