Path: utzoo!utgpu!jarvis.csri.toronto.edu!mailrus!csd4.milw.wisc.edu!lll-winken!uunet!algor2!jeffrey
From: jeffrey@algor2.UUCP (Jeffrey Kegler)
Newsgroups: comp.sys.ibm.pc
Subject: Re: Micro 1 Bankrupt
Message-ID: <426@algor2.UUCP>
Date: 7 May 89 02:18:59 GMT
References: <59089@yale-celray.yale.UUCP> <2932@rti.UUCP>
Reply-To: jeffrey@algor2.UUCP (Jeffrey Kegler)
Organization: Algorists, Inc., Reston VA
Lines: 53

In article <2932@rti.UUCP> bcw@rti.UUCP (Bruce Wright) writes:
>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 ...
>
>Bankruptcy does not necessarily mean that the company ceases to exist
>or that it stops operations.  [ Long and legally correct description
>of Chapters 7, 11 and 13 of the Bankrupcy Laws ].
>
>Many people who have little contact with the business world have a great
>deal of confusion about exactly what bankruptcy is.

As far a contact with the business world goes, my entire living comes from
my own little programming business.  Bruce's information is legally very
well informed, but if the implication is that one should continue to do
business with a mail order firm in Chapter 11, it is somewhat naive.

While legally a mail order company in Chapter 11 is reorganizing and may
never cause anyone more than a few days delay, practical considerations
suggest otherwise.  Often they are using Chapters 11 as a maneuver to slip
the company's assets into a few insider hands.  IF they take your money and
send you nothing, under Chapter 11 that can be perfectly legal.  They are
not legally able to give preference to one class of debtor (that poor devil
who paid for a hard disk) over another (the insider who sold them a pile of
worthless assets at a highly inflated value the day before they filed
Chapter 11).  In fact, they could validly claim that to pay you would be in
violation of court order.  If you think the management which the court left
in place is not being fair, you can fly out and stand in line in court.

Almost always the court leaves present management in place, and supervises
them to protect the creditors.  The judge is really at the mercy of the
information provided by the company, and Judge Wapner himself could do
little more than prevent the more egregious ripoffs of the larger
creditors.

Chrysler or a steel company in Chapter 11 may be a reasonable credit risk,
but given that consumers avoid mail order firms in Chapter 11 like the
plague, often their intentions are to simply to perform a few court
protected scams.  So Peter is not necessarily out his money, but I would
not give him $.50 on the dollar.
-- 

Jeffrey Kegler, President, Algorists,
jeffrey@algor2.UU.NET or uunet!algor2!jeffrey
1762 Wainwright DR, Reston VA 22090