The purpose of a Chapter 11 bankruptcy is to give businesses a chance to reorganize their debt, providing them a better chance at future success. This restructuring of debt allows companies to reduce their obligations and modify the terms of payments. This helps the company balance its income and expenses, continue to operate and regain profitability.
Back on Sept. 6, we told you about the Chapter 11 bankruptcy plan that was approved for Anchor BanCorp Wisconsin Inc. The plan included the repayment of $183 million in debt, but at a significant savings to the corporation - 73 percent worth or $137 million. The now-reorganized debt plan was for the Madison-based corporation to pay $49 million to Bank of America, U.S. Bank and Associated Bank. With this plan, the U.S. Treasury ends up with an equity stake in Anchor of about 3.3 percent. That's not a small sum, either, amounting to about $6 million. It also cancels out $139 million the company had in debt.