Originally published Sunday, June 21, 2009 at 12:00 AM
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Coming to terms | Chapter 22
Chapter 22 is "bankruptcy jargon for a company that has filed for Chapter 11 twice," said St. John's University law-school professor Anthony Sabino.
Chapter 22 is "bankruptcy jargon for a company that has filed for Chapter 11 twice," said St. John's University law-school professor Anthony Sabino. Chapter 11 is a bankruptcy filing that shields a company from creditors and lawsuits while it reorganizes.
"A company that just emerged from Chapter 11 is on a razor's edge," Sabino said. "It is arguably better than when it went in. The question is: Are they sufficiently positioned?" Given the current economy, he said, some companies are wary of exiting Chapter 11, fearful of a Chapter 22.
"Any number of things can blow you out of the water," Sabino said. "A company that has been doing reasonably well and has been solvent, had cash reserves — the bottom line is they are better prepared for the storm. A company coming out of Chapter 11 — there's no reserve left. There's nothing in the bank."
Copyright © 2009 The Seattle Times Company
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