Why might a company be forced to file for Chapter 11 even if it seeks to sell itself or restructure?

A company might be compelled to file for Chapter 11 even when it aims to sell itself or restructure primarily due to the actions of aggressive creditors who may accelerate debt payments. When creditors act aggressively, particularly in the face of financial distress, they may issue demands for immediate payment on outstanding debts, which can create a liquidity crisis for the company. If the company cannot meet these sudden demands, it can find itself unable to operate effectively or negotiate potential restructuring or sale deals. Chapter 11 provides a legal framework that helps the company to stay in business while it attempts to reorganize its debts and negotiate with creditors, thereby providing the time and protection needed to navigate its financial challenges.

The other options reflect situations that do not directly contribute to the need for a Chapter 11 filing. A high share price suggests strong market confidence in the company, which would typically make it less likely to seek bankruptcy protection. Favorable market conditions could lead to better opportunities for negotiation and securing financing, lessening the need for filing. Lastly, if there are no existing debts to restructure, the need for Chapter 11 would be largely moot, as the company would not face the same pressures leading to involuntary bankruptcy.