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How could your business change after a Chapter 11 reorganization?

The reorganization plan of Chapter 11 bankruptcy allows business owners to create a strategy for how they will repay debts over time and keep their business open.

However, this plan often requires business owners to restructure their operations as well. So, how could a business change when implementing their reorganization plan?

It is possible the ownership could change

Sometimes, financially restructuring a business only means filing Chapter 11 bankruptcy and establishing a plan of action to repay the debts to creditors. However, large corporations and companies often have larger debts that are more difficult to repay.

Businesses may have to consider restructuring their corporate model for a transaction to find debt relief, such as: 

  • A buyout from another company
  • A merger with another company
  • Transferring ownership of the company

New marketing and new branding can make a difference

Businesses might run up debt for several reasons. However, the main challenge to repaying those debts usually stems from a lack of profit. 

Reorganizing a business might also mean creating a new brand. Most California business owners know that success can often depend on how well they market their brand. Creating a new brand that meets a wider audience is sometimes the key to increasing profit.

And increasing profits can only help businesses pay their debts.

Offering new products or services

Business mergers often naturally come with new branding and new products. And like the branding, providing new products and services can help increase profits and help the business through bankruptcy.

Recent example of PG & E's restructuring efforts

There are benefits to restructuring and reorganizing a business. Take California's Pacific Gas & Electric's recent Chapter 11 bankruptcy, for example.

According to The Sacramento Bee, bondholders suggested to re-brand and rename the company to Golden State Power Light & Gas Co. They hope that the re-branding of their reorganization efforts will help "develop a more sustainable business model," and avoid falling into debt in the future.

And this should be the goal of all businesses that move forward with Chapter 11 bankruptcy. So, changes might be necessary to help the business survive the bankruptcy process.

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