Path: utzoo!utgpu!jarvis.csri.toronto.edu!mailrus!purdue!haven!uvaarpa!mcnc!rti!bcw
From: bcw@rti.UUCP (Bruce Wright)
Newsgroups: comp.sys.ibm.pc
Subject: Re: Micro 1 Bankrupt
Summary: That's not what bankruptcy means!
Message-ID: <2932@rti.UUCP>
Date: 6 May 89 14:24:07 GMT
References: <59089@yale-celray.yale.UUCP>
Organization: Research Triangle Institute, RTP, NC
Lines: 53

In article <59089@yale-celray.yale.UUCP>, galvin-peter@CS.Yale.EDU (Peter Galvin) writes:
>  [...] I called Micro 1 today and asked for the scoop, and
> they informed be that they are now under Chapter 11 bankrupcy
> protection and that I'd be receiving a letter.  They did say that
> they are under new management and expect to make good on all orders
> and money owed, but didn't say when...not to say that I believe them.
> But when I called sales they still seemed to be taking orders.
> 
> So, I'd recommend NOT ORDERING from MICRO 1 until they've come out of
> bankrupcy.  I'm surprised that they can still take orders while under
> court protection (if in fact they were...that's just my feeling), but
> I know I wouldn't order from them.   Just a friendly caution.

Bankruptcy does not necessarily mean that the company ceases to exist
or that it stops operations.  There are several different types of
bankruptcy;  the most common ones are those governed by:

	o Chapter 7 of the Bankruptcy laws - This is total liquidation,
	  all assets impounded and sold, liabilities paid off as possible
	  (often only a few cents on the dollar), and the company must
	  cease and desist its operation.

	o Chapter 11 of the Bankruptcy laws - This is reorganization.
	  The company continues operations, but has some protection from
	  previous creditors while it tries to work out payment terms.
	  This prevents the creditors from obtaining judgements and
	  seizure of assets in lieu of payment.  It does not mean that
	  the company is forbidden to seek out new business (in fact, it
	  will probably be required by the bankruptcy court!).  Whether
	  it is wise to deal with a firm in such a situation depends on
	  whether you think they will be able to continue operations and
	  whether you think the organization is reputable.  Numerous
	  large and well-known companies have sought protection under
	  Chapter 11 and re-emerged as profitable companies again - this
	  is not usually possible without new business!  Obviously if the
	  company continues to lose money it may eventually die the
	  corporate equivalent of death by Chapter 7 (which is not, by
	  the way, the only way for a corporation to "die"). 

	o Chapter 13 of the Bankruptcy laws - This is individual bankruptcy.
	  It usually does not apply in business situations unless the
	  business organization is a sole proprietorship or a partnership.
	  Depending on the direction of the court, it can look similar to
	  either Chapter 11 or Chapter 7 for corporations.

Many people who have little contact with the business world have a great
deal of confusion about exactly what bankruptcy is.  It is certainly NOT
necessarily a complete extinction of the company - Chapter 7 above is
probably what most people who hear the work "Bankruptcy" think about;
but Chapter 11 bankruptcies are also quite common - perhaps even more
common than Chapter 7 bankruptcies.  

						Bruce C. Wright