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Foamex International Inc. (FMXI) Message Board

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  • texasbroker2000 texasbroker2000 Aug 11, 2005 2:18 PM Flag

    qualifying for bkrptcy.

    Foamtruth, would the lender have released the carpet cushion collateral and allowed the sale if there were no assurances that the bond payment would be met?

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    • Having worked for two .coms now I know a little about bankruptcy proceedings, and neither had over $1B in revenues and tangible assets like plants and inventory.

      The bank and mgmt do not win anything by declaring bankruptcy. They risk losing customers and suppliers in bankruptcy, which hurts the banks ability to ensure they will get the money they lended. Neither win.

      Additionally a bank will have all kinds of triggers for liquidity in a lending agreement that force customers to take actions before bankruptcy.

      So, on 8/15 when the bond payment is due, if they have worked out their next round of financing terms, and surprise, surprise, they have not declared bankruptcy, then where does the stock head? hmmm....

      the shorts are having a field day with all the panicky sellers on this board.

      • 1 Reply to teamgtsa
      • team, I agree with you. I don't see the benefit for the lenders or management to file. There's operating earnings here, Fmxi is worth much more as an ongoing concern and bk jeopardizes sales and supply relationships.

        As long as the operating earnings are positive and management continues to move toward more efficiency I think the lenders will work out the debt issues in the hopes of preserving their investment.

 

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