Wednesday, June 26, 2013

R-Anell Homes Files Chapter 11 Bankruptcy

R-Anell Homes in Crouse, NC filed for Chapter 11 Bankruptcy on June 22, 2013. No word yet as to how they might be reorganizing.  This is the latest modular home factory to file for bankruptcy or close their doors this year.

Definition of 'Chapter 11'

Named after the U.S. bankruptcy code 11, Chapter 11 is a form of bankruptcy that involves a reorganization of a debtor's business affairs and assets. It is generally filed by corporations which require time to restructure their debts.

Chapter 11 gives the debtor a fresh start, subject to the debtor's fulfillment of its obligations under its plan of reorganization. Chapter 11 reorganization is the most complex of all bankruptcy cases and generally the most expensive. It should be considered only after careful analysis and exploration of all other alternatives.


Dan Hobbs said...

Another definition of Chapter 11 is "Chapter 7 in waiting." (Chapter 7 is bankruptcy liquidation.)

For a Chapter 11 to be successful, the debtor (R-Anell) must move rapidly to:
1. Calm customer fears
2. Stabilize and reopen vendor relationships
3. Restructure the balance sheet
Failure in any of these three realms can grind operations to a halt and force the Chapter 7.

How do I know? As part of my turnaround background I was required to place a company into Chapter 11. (I got onto the scene too late to steer the company away from it.) We managed to satisfy the secured creditors and serve existing customers, but unsecured creditors took a hit.

Personal conclusion: Chapter 11 is like divorce -- abhorrent and gut wrenching, yet sometimes unavoidable. My sympathies to the folks of R-Anell. If having a sounding board of someone with the real life experience is of a help, my phone line is open at Cardinal, 434 735-8111.

Anonymous said...

Coach, I just heard that another big modular home company just bought them and is going to get them out of bankruptcy. Have you heard anything yet?

Anonymous said...

It really sad to hear of this sort of thing happening to good companies. It is also a real problem for the rest of us still around as the vendors that take a hit turn around and charge everyone else more. But what I really hate is as soon as they are back in business the same vendors are in there drooling for their business as happened here in Florida after Palm Harbor went bankrupt. Probably hurt me more than it did them. They just crapped on everyone, went right back into business, and I have to pay more!