In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides insight into the positive aspects of a company securing a credit line during bankruptcy proceedings.
Article Link: https://www.tennessean.com/story/money/real-estate/2015/01/07/masonary-company-wasco-seeks-bankruptcy-protection/21399313/
Summary
WASCO Inc., one of the largest commercial masonry companies in the United States, has filed for Chapter 11 bankruptcy protection to manage its debts, including a substantial penalty from its former pension plan. The Nashville-based company, along with its subsidiary Lovell’s Masonry Inc., reported assets over $1 million against liabilities of $9 million. The bankruptcy filing follows a decision to not renew a union contract, resulting in a withdrawal penalty from the Bricklayers & Trowel Trades International Pension Fund. WASCO has secured a $2.5 million line of credit from Kingston Capital to maintain operations during the bankruptcy process. Adam Stein-Sapir from Pioneer Funding Group noted that this credit line indicates confidence in WASCO’s ability to restructure and continue its business post-bankruptcy.
- WASCO Inc. filed for Chapter 11 bankruptcy with estimated liabilities of $9 million, including a $5.5 million penalty from a pension fund.
- The company has secured a $2.5 million line of credit to support operations during the bankruptcy proceedings.
- Adam Stein-Sapir of Pioneer Funding, LLC, views the credit line as a positive sign of the company’s potential to successfully reorganize and emerge from bankruptcy.
Q&A
What is Chapter 11 bankruptcy?
Chapter 11 bankruptcy is a legal process that allows a business to reorganize its debts and continue operating while it works out a plan to pay creditors over time. This type of bankruptcy is often used by corporations to restructure their business and debt obligations. For more information on bankruptcy and its implications, you can visit Pioneer Funding LLC.
How does a credit line affect a company’s bankruptcy process?
A credit line, particularly a debtor-in-possession (DIP) loan, provides a company with the necessary funds to maintain operations during the bankruptcy process. It is a sign of lender confidence in the company’s ability to restructure and eventually emerge from bankruptcy. This financial support is crucial for the company to continue its day-to-day activities and can help stabilize the business during uncertain times.
What happens to employee pension plans during a company’s bankruptcy?
During a company’s bankruptcy, pension plans can be affected, especially if the company faces penalties or liabilities related to the pension fund. However, employee benefits are often protected to some extent by government guarantees. In the case of WASCO, the company’s restructuring advisor assured that vested employee benefits would not be impacted by the bankruptcy because they are guaranteed by the federal government. For those dealing with customers filing for bankruptcy, this guide may offer additional insights.
