FI.Chapter24 - p) 0 ' d,:, ,. /' grtcy,ffie*;'gecr!ceEeet...

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p) 0 ' d,:, ,. /' **wkr=u: grtcy, ffi e*;'gecr!ce€Eeet " amd Lic4aai*Ea"ii,*at l1 Jun€ 1993, Contirent.rl Airlinos per formed, for ihc seconcl tine, a feai fcr{ cornpanies accornplish cvcn o]rce*it crrrc16erl i 'rr bJrkrupl.\. \\llpn (,.rlirxirlJl Ar- r ,^ Ilord||rd. trr . ,l(,Ilts hrlh q] .Lb -rdr.,n,-. frleJ t ,r b"nl nrft( ) , .,1r, pr,i, c. ., ',r In D, c, n'b.r Inorl, I.,wedr.\o"billior' \\l',rr rl enrLrtcll irom t.rrrlrup,'y rrr lo-r. rl'ufin,, hacl onll' fotrr subs iaries, it had sluvcd its debt r^ $. .8 billi,'r, .rn.l ir h.r,i $o.1q r.rllr,'n In cash. In nddition, Continenlal hstituted a ncw n'.rl' 6) rhal fo. ,,- d o'r u rn' ., rni' - r\ irc b Europe anLl Asia r'hile cutiing back on short-haul flights. While urd,r Lourl I'rola.lron wlILl. nrern. lhdl rhe 8.rnl'.rpt.v ' \'Jrr p'e!,nrrd Coniinental's creciibrs frorr seizing the dssets securing jis dcbt or everl tuorr collecting irter- , -l dui or llu{ JLt,l- ll\ , oDrp"n} $.r- dbie l^ t.rk, ", ror- un.r\d dbl, r,' r. Iorl'.,nlnrpt , on,p,.li.,'r. . Tr, llrrri,,.ldr. il h.r, ible 1., .rbr." gil, ir. rb" .'rrlr,\'.,'n.l l'\\u il. *,E(-. This aciion, aloDg \siihnot having to paY inter- est ,)n its debt, pormittecl it b offer rery lorv fares .rnd still gcncrate positivc cash flo$,s. Ilowcver, thc operatin8 and fin rcing act!,nntages provided by ihc bankrupicy i{erc ..*ll) to -um, frrliLip.,Ir- Tl e."i,F.,r\ - rp 'r!,.rnr/dlr.,r, nl.,f ,.,ll, d f,'r p.,) rr; , rrdi tors onlv a fractn)n of whal tlrev \a'ere o\!ed. Cr€clitors r{ere .ilso re.luircd io take sone sk)ck in thc "new" Colrtinental. In .ddition, 55% of the equiiy lvent k) Air Canada and to Air lhrtners, n Fort WorLh tuvesk)| grorp, which, bctweu then, poured S15{l nrjllion of now cash ink) the airlinc As ofien happer-, all of ihe ecllriiy went k) creditors and ner, invcstors thc firm's ori8inal stockholders wcrc totally r^'ipcd out. Continental is one ol ihe success stories of t'.,|llnrpr.) rhp ,u,p,,,,uo l-lr hd. -u - \ ivcJ. rl- , u.1^mFr- ,.rL r,rerrIrb F,r, vicc, its enlployces kepi their jobs, iis crcdj tofs got more than they woulcl have reccived irr ., l'qui.lnr:,' r . 1J i., n, w "q.r' y i,r\c-ror- have madc rnoney. As u,o discuss in ihe chap- tcr though, otller firms fncing bankruptcv have not fircd so well. Thc decisions thai fifms'manrgcrs, crcclih)rs, and othcr siake holders makc before arid duing bnnkrupicy proceedings (tetermnrc the final rcsults. As you go through the chaptcr, thirk about the decisions tlrat (i)ntinenlrl'b man agers and crcclitors hrd to make r('gardillg bdnkruptcy and r$rgnnizaiion, and thc cffects the firm's banknrptcy has hn(t on all of its stakdrolders as wdl as on colnpeting .rirlrnc. . Ir \ rll bc
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852 Chopler 24 Eonkruprcy, Reo/gon,zotion, ond tiqu'dorion Thus faa {,c have dcalt *,ith issues faced by grou'ing, slr.ccssful entcriidses.
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FI.Chapter24 - p) 0 ' d,:, ,. /' grtcy,ffie*;'gecr!ceEeet...

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