Bankruptcy – Life Goes On!
Every week I sit across from someone who tells me about how guilty they feel about even considering filing for bankruptcy. They feel guilty because they are unable to repay their debt and they are afraid of what their future will look like. Fortunately, life does go on, even if you file bankruptcy.
Last week, Readers Digest filed for Chapter 11 bankruptcy protection for the second time in less than four years, saying it needs to cut its debt so it can keep restructuring. They filed bankruptcy and guess what? They are still publishing magazines.
Chapter 11 bankruptcy is to companies what a Chapter 13 is to individuals – an opportunity to restructure debt so that debts are prioritized under the U.S. Bankruptcy Code and paid through a court approved plan. By going into Chapter 11, Reader’s Digest will cut its debt load by 80 percent, leaving it with about $100 million in debt, allowing the company to stay in business and pay its employees and freelancers while restructuring its business.
Reader’s Digest emerged from its first Chapter 11 bankruptcy in 2010, and is still one of the world’s most widely read magazines. Still think you won’t survive bankruptcy?