True Temper Sports Files Chapter 11 Bankruptcy

Bankruptcy Stamp

According to an article in the Business Journal, True Temper Sports Inc. has filed for Chapter 11 bankruptcy protection.  The company is filing a pre-packaged bankruptcy petition with the approval of its secured lenders, bondholders and shareholders.

The article said:

“The filing is considered to be “a mechanism to implement the agreed upon balance sheet restructuring, and will not impact the fundamental business of True Temper or its day-to-day operations,” according to a company statement.”

The True Temper Sports bankruptcy is designed to reduce the company’s debt from $275 million to less than $40 million. True Temper Sports hopes to emerge from bankruptcy in the next 60 days.  That sounds like great deal, just two months in bankruptcy and then emerge from bankruptcy with only a fraction of the debt it had before.  What would you do if you could have just a fraction of the debt you have today, or no debt in just a couple of months? Save for retirement, get health insurance or buy a home?  Many debtors feel guilty about dumping debt during bankruptcy; but shrewd businesses understand that bankruptcy is a tool like any other, designed to help them succeed in the long-term. True Temper Sports took an honest assessment of their financial position and determined that is was time to file bankruptcy if they in fact wanted to survive, not only that; but their creditors agreed. Why would any creditor agree to a bankruptcy filing?  They may agree to bankruptcy because priority creditors can get paid first if non-priority debts are discharged or reduced during a bankruptcy.  For example, student loan lenders may be glad to have a debtor file bankruptcy if it frees up more money for them.  Sometimes bankruptcy can benefit creditors. That’s why some creditors force business/debtors into a bankruptcy filing.

By | 2017-12-13T01:10:41+00:00 October 21st, 2009|Chapter 11 Bankruptcy|Comments Off on True Temper Sports Files Chapter 11 Bankruptcy