The Bakers Footwear Group is looking to convert its already-filed bankruptcy to Chapter 7 status. This bankruptcy conversion will allow Bakers to stay in business while it proceeds with liquidating its assets. Initially, CEO Peter Edison was hoping to transform the company, which was started by his grandfather, into a smaller change after the bankruptcy proceedings, but that now looks less than likely.
Chapter 11 to Chapter 7
Originally, Bakers filed for Chapter 11 in October 2012. They had been planning a sale of the company in one large go, but they asked the US Bankruptcy Court on Jan 2 to inquire about changing the filing to Chapter 7, which will allow a liquidation of company assets. The sale plans had fallen through and now Bakers is looking for a more viable solution to their bankruptcy problems.
In Bakers initial filing for bankruptcy, they selected Chapter 11, which allowed for Bakers to maintain full control of their assets in their plan to sell the company to the initial plan by Edison. Generally, Chapter 11 results in a reorganization of business assets from the debtor. Depending on a plan, a debtor can emerge from a bankruptcy plan later as a still-active company, sans debt and necessarily-liquidated assets of course.
With Chapter 7, the debt of Bakers is placed into a creditor (or other third party’s) hands, allowing for a full liquidation of all company assets to not only resolve the debt, but also close down the Bakers company as a whole.