Bankruptcy reorganization financing provides potential turnaround financing for your business.
Bankruptcy reorganization financing is required for businesses that are facing difficult bankruptcy situations. Often times a management or employee buyout will be the main part of the reorganization. This strategy will save jobs and also give employees the opportunity to work together to turn the company in the right direction.
Here is a good example of bankruptcy reorganization financing at work. If company ABC is facing bankruptcy and potential liquidation it will need to restructure the organization. They would contact a financial company and work with them to restructure the company. The employee unions would work to raise a working capital loan to fund the transaction of the company from the owners who are facing the pending doom of bankruptcy.
All of the employees would vote to agree on taking a salary reduction in exchange for becoming a part-owners of the new company. The reduced wages would increase cash flow. The employees benefit because they have the potential of actually making more money than before because they will all become equal owners and could share 80 percent of the profits for example. The additional 20 percent would go towards the company that helped fun the transaction.