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Biotech / Medical : FPA Medical Management - FPAMQ -- Ignore unavailable to you. Want to Upgrade?

To: Bald Eagle who wrote (950)	7/17/1998 10:14:00 AM
From: Diamondcutter	Read Replies (1) \| Respond to of 1110

Just a point of clarification. Bankruptcy, or filing under Chapter 11, is designed to protect the company's assets from creditors. Since creditors have first right to assets, they can force the company to liquidate properties to pay them off. This is good for senior debt holders near term, less good for anyone else. Chapter 11 allows the company time to restructure operations and propose changes which allow a return to positive cash flow. Equity shareholders are at risk as any new financiers may require that they receive all the equity of the company. If Chapter 11 fails, the next step is liquidation (Chapter 7). Again proceeds of the liquidation goes to debt then equity holders. Because FPAM mgt is going to all this effort to prune contracts and layoff people, it has no direct bearing on whether they file Chapter 11. As mentioned, this is only another option under restructuring. Diamondcutter