Depending on the type of bankruptcy that a company files for, they may be given a few different options for how they can continue to operate throughout the proceedings. For many Iowa companies, filing for bankruptcy is a solution to abolish pressing debts and hopefully reach an agreement with creditors where operations can continue if contingencies are met in a timely manner.
One example of a bankrupt company seeking to continue its operations is the Reading Eagle Company in Reading, Pennsylvania. After the paperwork was filed in which the company sought Chapter 11 bankruptcy protection, the organization issued a request for a $1.5 million loan to allow it to continue supporting operations even though bankruptcy proceedings were underway. The company they asked to loan the money is one that they are currently indebted to for $17 million.
While the company was seeking the loan as soon as possible, it was decided that whether or not the money would be granted would be determined in a formal court hearing. If approved, the money would be distributed in two payments and would be added to the amount of debt already incurred by Reading Eagle Company.
If a business is struggling financially and at a loss for how to reconcile its finances, they may wish to hire an attorney. With the guidance and support of a legal professional, companies may be better able to reach an agreement with their creditors without compromising their future.
Source: readingeagle.com, “Reading Eagle Company seeks $1.5 million loan to continue operations during bankruptcy,” David Mekeel, Mar. 22, 2019