Path: utzoo!utgpu!jarvis.csri.toronto.edu!mailrus!ukma!gatech!mcnc!rti!bcw
From: bcw@rti.UUCP (Bruce Wright)
Newsgroups: comp.sys.ibm.pc
Subject: Re: Micro 1 Bankrupt
Summary: Legal vs recommended
Message-ID: <2937@rti.UUCP>
Date: 7 May 89 14:13:13 GMT
References: <59089@yale-celray.yale.UUCP> <2932@rti.UUCP> <426@algor2.UUCP>
Organization: Research Triangle Institute, RTP, NC
Lines: 47

In article <426@algor2.UUCP>, jeffrey@algor2.UUCP (Jeffrey Kegler) writes:
> In article <2932@rti.UUCP> bcw@rti.UUCP (Bruce Wright) writes:
> >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.
 
My original posting should not have been taken as a recommendation to
deal with that particular company - I was only responding to what sounded
to me like surprise in Jeffrey's original posting that Micro 1 was still
allowed to accept new business.  It was not necessarily my intention to 
imply that Jeffrey had little contact with business realities, though I 
will admit that it sounded like that to me through the rather terse contact 
possible through the net.

Jeffrey goes on to talk about some of the bankruptcy scams that sometimes
go on, and about the wisdom of dealing with a company in such a situation
through the mail.  This is for the most part pretty good advice;  I had
mentioned in passing in my previous posting that whether you choose to
deal with such a firm should depend in large part on how reputable you
feel the firm to be.  Obviously that can be difficult to figure out if a
mail-order company is in another state and you have little direct or
indirect contact (say through people you know in that state) with the
management of the mail-order company.  

For what it's worth, in my experience companies are not normally organized
with the intention of declaring bankruptcy - if you are intending to set
up a scam from the start it's so much simpler to just disappear and set
up operations elsewhere when things start to get hot (the infamous boiler
room operations).  However, given a company in trouble and a management
with a rather low standard of ethics, it can be very tempting for them to
try to milk the company for all it's worth once it's obvious that the
company is not going to make it.  I've seen this happen several times in
reasonably close proximity (and been one of the creditors holding the bag
in one case).  Many people that I know have surprised me - in both good and
bad ways - when faced with this sort of business crisis or the threat of
it.  You don't really know what someone is made of until they've gone
through some real difficulties.

						Bruce C. Wright