I read with interest your articles on "Chapter 11: to File or Not to File?" (Viewpoints, Dec. 2) as well as Greg Abrams' letter "Chapter 11 Can Aid in Liquidation," (Dec. 30).
As a consultant who has specialized in working with distressed companies for many years, I would like to point out that the issue is not simply whether a company should or should not file, but rather what options among a multitude should be taken. Of vital importance is a complete analysis of the viability of the firm, secondly an analysis of the goals of the principles and thirdly a final determination as to the environment that would most benefit the business if it is to be rehabilitated. The analysis can be done very quickly and economically.
As Abrams points out quite accurately, most insolvent businesses never survive. However, this is due in part to lack of an in-depth analysis prior to considering a course of action as well of the absence of an adequate business plan to ensure a reasonable chance of success.
An in-depth analysis does not always ensure the survival of the business. Nevertheless, without having this complete workup, it would seem to me that it is rather like a doctor prescribing medicine without having even examined the patient.
A number of insolvency law firms are now availing themselves of this invaluable tool by obtaining an analysis to make a determination of what course of action is indicated; how best to rehabilitate the company, either in a Chapter 11 or in an informal environment, or whether a liquidation is the best course of action.
Unfortunately, so many business people who find themselves in difficulties are not aware of the alternatives to filing in a Chapter 11, and do not understand that an objective analysis by an independent party is available to them, which may bring to light viable alternatives or prove invaluable in assuring a successful rehabilitation, even in a Chapter 11 proceeding.