Nassau Broadcasting Partners, a broadcast company that has radio stations across the country, has issued a request to convert their previously filed involuntary Chapter 7 bankruptcy to a Chapter 11. This change would allow the company to continue operating under normal conditions, while still reorganizing their debt. As part of the request, Nassau claimed they were experiencing a positive cash flow.

The Chapter 7 bankruptcy was filed by Nassau's creditors in September, thus Nassau was unable to file for the conversion by the required Sept. 4 deadline. The judge assigned to the case heard arguments from both sides last week, but it is not yet known how long it will take for him to make a decision.

If a business wishes to continue operating to repay creditors, rather than allowing creditors to help reorganize debt, possibly through the sale of business assets, they can typically file a request to convert a Chapter 7 bankruptcy to a Chapter 11. In Nassau's case, company representatives fear any cessation of operations in the more than 49 radio stations owned by the company could impair the value of the business, making it more difficult to recover from the impending bankruptcy. The representatives claim a Chapter 11 filing could avoid liquidation of assets, instead allowing for reorganization.

The creditors originally requested that the broadcasting company be placed on auction to receive the fastest resolution to the debt, citing Bankruptcy Code Section 363. The lenders hoped to then bid on the company, allowing it to operate normally and provide financing under a Chapter 11 agreement and eventual sale of the company.

Source: rbr.com, "Nassau seeks Chapter 11, not 7," Oct. 6, 2011