The common perception of bankruptcy is that it is the first pealing of the death knell for a company. But that isn’t always the case. Very often, bankruptcy proves to be the most important step toward reviving a company’s future.
By entering into bankruptcy proceedings, an entity essentially puts oil on the water. That is, it creates conditions that allow for a more measured approach to deciding whether it’s possible to keep operating or if it’s time to pull the plug.
In the case of Tengion Inc., it appears that the pause of Chapter 7 bankruptcy has provided the breathing room needed to keep prospects of the company’s cutting-edge research alive. If all goes according to reported plans, a new team of owners will be closing a deal today that will begin resolving bankruptcy issues and allow the company to continue moving forward.
It seems fitting considering the firm’s core competency is in regenerative medicine. Look that up and you’ll find that this is the area of research focused on stimulating cells to create human tissue or organ function that has been lost due to age, disease or damage.
Tengion got its start in 2003 in Winston-Salem based on work by a Wake Forest researcher. In recent years, the company has been in a race against time, trying to launch clinical trials of a process for augmenting kidney function. But it ran out of money, leading to bankruptcy.
One lawyer familiar with the proceedings say the sale preserves the work Tengion has done to date, should give the company a jolt of much-needed cash, and allow it to restore jobs that have been lost.
Those who know business appreciate that this kind of outcome doesn’t occur without nuanced legal structuring of the entire transaction. For such positive outcomes, parties are well advised to seek out legal counsel with experience and understanding of both business and the relevant law.