For businesses in Texas and across the country, financial issues and business struggles can happen in an instant. In many cases, they happen due to unforeseen circumstances involving a high-profile business owner or substantial shareholder. Before anyone realizes what happened, it is necessary to move forward with a Chapter 11 bankruptcy filing to deal with the issues that seemingly came out of nowhere. Those who are experiencing business struggles, whether it is a large or small business, need to have a grasp on the benefits and facts of filing for Chapter 11 bankruptcy.
A pharmaceutical company, KaloBios, that got caught up in the ongoing saga of Martin Shkreli has filed for Chapter 11 bankruptcy. Mr. Shkreli was the chief executive of the company, but he was fired after his arrest on securities fraud. The former chief executive had become infamous for his public relations blitz, prominent presence on social media and, most notably, for raising the price of a life-saving drug from $13.50 per pill to $750 per pill and doing so in an unapologetic fashion.
The company was in disarray after Mr. Shkreli’s arrest and the filing was done in an emergency decision. The company felt that the business was under significant threat because its liquidity was in danger of being compromised due to Mr. Shkreli’s situation. The company is also facing being delisted from the Nasdaq due to Mr. Shkreli’s legal issues and its failure to file a report for the quarter ending on Sept. 30.
When a company is as large as KaloBios and is facing the scrutiny it is because of the behavior of its chief executive, financial turmoil is inevitable. This can also occur with lesser-known companies that do not have the issues that this company does. A business bankruptcy is a strategy that can prevent the entire company from coming apart and accord an opportunity to get back on stronger ground once the issues that sparked the decision to file are clearer.
Source: Wall Street Journal, “Biotech Linked to Martin Shkreli Files for Bankruptcy Protection,” Peg Brickley, Dec. 30, 2015