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For two years, Caesars Entertainment Corporation has been in and out of court with creditors over who must pay to repair the company's operating unit, which cannot repay its $20 billion debt on its own. As of September 2016, it appears that Caesars' bankruptcy battles could soon be over.

The current offer is $5 billion in cash, new debt, and stock in a reorganized version of Caesars Entertainment Corporation. Creditors in New York have until midnight on September 24th to accept or reject the deal, which could make or break the future of the company. If this offer is accepted, the company's senior leaders will have to give up certain concessions they won at earlier stages of the negotiation process. These concessions amount to hundreds of millions of dollars. The company hopes to reorganize and become profitable again, as is the case with all companies that file for Chapter 11 bankruptcy. However, this is not always possible. Sometimes, a company simply cannot be saved due to overwhelming debt, an inability to reach an agreement in bankruptcy court, or a lack of consumer demand for that company's product or service.

Difficulty Attracting Casino Visitors


Hanjin Shipping Company Bankruptcy Leaves Ships Stranded at Sea

South Korean shipping giant Hanjin Shipping Co. filed for bankruptcy in August 2016. Since its filing, the company has run into many issues with ports around the world. Many refused Hanjin ships access to their docks, leaving ships and their cargo stuck in the ocean, waiting for further instruction. In many of these cases, the ports refused the ships' access because they feared Hanjin Shipping Co. would not pay them for the use of their properties.

Bankruptcy can leave workers at all levels of a company feeling like they are “in limbo.” This feeling can extend to all parties who do business with the bankrupt entity, such as its vendors, its partners, its customers, and its shareholders.

Shareholders are Increasingly Likely to Have a Say in a Company's Bankruptcy Plan

When companies are owned by the public through shares of stock, the company is known as a publicly held company. The individuals who own shares in the company are known as shareholders and these individuals are partial owners of the company. Increasingly, shareholders are demanding a say in their companies' bankruptcy choices.

A recent piece published by the Wall Street Journal discusses this phenomenon, which is occurring primarily with shareholders of energy, coal, and other commodities-based companies. In many cases, companies that file for Chapter 11 bankruptcy are sold at prices that cannot cover their debts, leaving shareholders with nothing. In the cases discussed in the piece, shareholders are standing up for their rights to at least have some say in their companies' negotiations, stating that these companies are often worth more than they are sold for and that if they were sold for fair prices, the shareholders could potentially recover some of their money. They also state that they should be able to have their interests represented in cases where there is a problem to blame for the company's failure, such as mismanagement.

What Happens if Shareholders are Given a Say in Bankruptcy Proceedings?


In an earlier post, we discussed fashion retailer Aeropostale's financial troubles, the changing factors in the fashion world behind them, and the company's bankruptcy plan. Now, there are new developments regarding Aeropostale's bankruptcy and potential financial recovery. It and Versa Capital Management hope to reach a purchase deal by the second week of August.

In early August, Aeropostale won court approval to pay expenses to Versa Capital Management to cover the costs of Versa's stalking horse bid. Versa hopes to make a binding offer on Aeropostale's assets at auction. The management group has experience working with bankrupt retailers. One of its previous success stories is its reorganization of Eastern Mountain Sports in 2015. If it does obtain Aeropostale's assets, the management group hopes to keep at least 500 Aeropostale stores open in the United States, keeping thousands of individuals in those stores employed. The case is currently pending in the United States Bankruptcy Court for the Southern District of New York in Manhattan. Reorganization of a bankrupt company can be complex and involve multiple disputes from the parties involved. If you are considering filing for bankruptcy as a business owner, be sure to arm yourself with the aid of an experienced bankruptcy lawyer before you begin the process.

What is a Stalking Horse Bid?


Aeropostale Files for Bankruptcy

Following news earlier this year about Quiksilver and PacSun filing for bankruptcy, another once-popular teen clothing brand, Aeropostale, has filed for bankruptcy after suffering financial troubles for 13 consecutive quarters. The retailer listed $354 million in assets and $390 million in debts in its Chapter 11 bankruptcy filing. It has secured $160 million in financing from Crystal Financing, LLC. The company is still trying to find a buyer so it can continue to operate and become profitable once again. As a measure to save money, the retailer is planning to close 113 of its stores in the United States and all of its 41 stores in Canada.

Trends come and go and with these trends, retailers come and go. Some apparel brands, like Nike, have a timeless appeal while others, like Quiksilver, experience ebbs and flows in popularity as the public's tastes change. A key component to a brand's timelessness is its ability to adapt to the public's changing tastes, rather than allowing itself to become “stuck” by failing to move past a specific trend. An example of a clothing brand that failed to move past its initial success is Members Only, a jacket brand that is now associated strongly with the dominant style trend of the 1980s.

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