In this article, Adam Stein-Sapir of Pioneer Funding, LLC, provides expert insight on the bankruptcy process and strategies.
Article Link: https://www.nhregister.com/business/article/New-England-Orthotic-and-Prosthetic-Systems-files-11729237.php
Summary
New England Orthotic and Prosthetic Systems, a provider of orthotic and prosthetic devices with 21 locations across four states, has filed for Chapter 11 bankruptcy. The company’s president, David Mahler, confirmed the filing and attributed the need for bankruptcy protection to overextension by their private equity firm and regulatory changes. The company’s senior debt was acquired by another orthotic and prosthetic retailer, with plans to merge by year’s end. Adam Stein-Sapir, a portfolio manager with Pioneer Funding Group, comments on the situation, describing the debt purchase as a “loan to own” strategy, which could lead to the acquiring company getting a discount on the debtor company’s real value.
- New England Orthotic and Prosthetic Systems has filed for Chapter 11 bankruptcy due to financial overextension and industry regulation changes.
- The company’s senior debt was bought by a retailer who plans to merge with the company.
- Adam Stein-Sapir of Pioneer Funding Group explains the “loan to own” strategy often seen in bankruptcy cases.
Q&A
What does Chapter 11 bankruptcy mean for a company?
Chapter 11 bankruptcy allows a company to continue operating while it restructures its debt. This can provide the company with the opportunity to stabilize its finances, renegotiate its debts, and reorganize its business structure in a way that is more sustainable for the future. For more information on bankruptcy, visit Pioneer Funding LLC.
How does the purchase of senior debt affect the bankruptcy process?
The purchase of senior debt, especially by a company that plans to merge with the debtor company, can significantly influence the bankruptcy process. Senior debt is prioritized and must be paid before unsecured creditors. When the senior debt is acquired by an entity with an interest in the company’s future, it can lead to a “loan to own” situation where the debt purchaser uses the bankruptcy process to eventually take ownership of the company at a potentially discounted value.
What are the potential outcomes of a Chapter 11 filing?
A Chapter 11 filing can result in various outcomes, including the restructuring of the company’s debt and business operations, the sale of the company to a new owner, or in some cases, liquidation if reorganization is not feasible. The goal is to allow the company to emerge from bankruptcy in a stronger financial position. For creditors involved in such cases, understanding the risks and options, such as selling their bankruptcy claims, can be crucial. More details on this can be found in the guide to selling bankruptcy claims.
