Vice Media Has Filed for Chapter 11 Bankruptcy Protection
Vice Media recently filed for bankruptcy. The media company was once worth $5.7 billion and today is worth only a fraction of that. After looking for buyers for the company for around $1 billion, the company has gone into Chapter 11 bankruptcy filing in the Southern District of New York.
It's interesting to think about a major media presence that has become worthless just as a topic of conversation. However, what Vice is doing in bankruptcy right now is a good example of Chapter 11 as a business tool. Vice has gone into bankruptcy with a plan to continue in business. Some of the lenders of the company have proposed to purchase the assets for $225 million and then take on $500 million to $1 billion in liabilities. The media releases say that the company intends to continue paying employees & vendors, and keep its top management in place.
This is an instructive example of the use of Chapter 11 to effectuate a sale of assets and manage the liabilities and any litigation by going through the bankruptcy process. Most people don't consider Chapter 11 bankruptcy as a platform for selling assets, however, using Chapter 11 to sell assets and allow a new buyer a chance to give a company new life is an acceptable and a productive use of the Chapter 11 bankruptcy process. Asset sales done outside of bankruptcy, without success or liability as a matter of law. However, that doesn't mean that no one will ultimately sue over not getting paid or not having their rights attended to as part of the sale process. Although those contentions are almost always without merit, they are costly to manage.
By putting a company into bankruptcy, making all the vendors, owners, employees, etc. public, everything is placed on the table. All the liabilities and all the lawsuits are in one place, allowing the buyer to come out on the other side with a favorable debt and equity structure All the issues and complaints that any creditor, vendor, shareholder, owner or employee may have had with respect to the prior business operations have been resolved.
If you or your client are contemplating the sale of the business and there's a lot of what we will call “noise", please call us to discover whether the costs and the transparency of bankruptcy are outweighed by the benefits of the clarity that will come for a buyer on the other side of that process. In some cases, washing the company’s issues through bankruptcy is the only way a buyer will ever get comfortable with taking on the business as a new venture.
Seattle Bankruptcy Attorneys
Do you have questions about and bankruptcy and business law? Contact the experienced Seattle bankruptcy attorneys at Wenokur Riordan PLLC today at (206) 724-0846 to discuss your situation.
