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Pastimes : Georgia Bard's Corner
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To: Ga Bard who wrote (1569)5/5/1998 8:27:00 PM
From: Crossy  Read Replies (1) of 9440
 
re: Bankrupcies

Gary,
I have the impression that Chapter 11 is often used at retailing companies to get rid off unwelcome leases - a cute little tactic to get the house in order. Let me quote from an 8-k filing..

"As debtors-in-possession, the Debtors have the right, subject to Bankruptcy Court approval and certain other limitations, to assume or reject executory contracts and unexpired leases. In this context, "assumption" means that the Debtors agree to perform their obligations and cure all existing defaults under the contract or lease, and "rejection" means that the Debtors are relieved from their obligations to perform further under the contract or lease but are subject to a claim for damages for the breach thereof. Any damages
resulting from rejection of executory contracts and unexpired leases are treated as general unsecured claims in the Chapter 11 Cases. As of April 17, 1998, the Debtors had rejected or sought authority to reject 17 real property leases and had assumed or sought authority to assume two executory contracts. The Bankruptcy Court has extended the time within which the Debtors must assume or
reject unexpired leases of real property through October 3, 1998."

What do You think about such a tactic. I for myself saw such kind of strategy in a very succesful reorg by Braun's Fashion Corp: BFCI. They emerged from Chapter 11 November 96, stock trading around $2.50. It's a $13 stock right now trading on the Nasdaq. High was $16. Can think of the fact that for retailers & other lease-intensive biznesses Chapter 11 ain't so bad at all..

regards
CROSSY
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