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Bankruptcy May Be Your Option

Vaping company seeks Chapter 11 bankruptcy protection

As people in Oklahoma become more aware of the potential health effects of smoking, many people turn to vaping, often billed by relevant companies as an option with fewer detrimental impacts on a person's overall help. While the vaping industry has seen some degree of success in recent years, some are claiming that new FDA regulations could harm the industry. In fact, one company, NJoy, recently filed for Chapter 11 bankruptcy protection.

The company claims that the FDA is primarily responsible for its financial struggles. According to new regulations, any products related to e-cigarettes introduced after February 15, 2007 must be approved by the FDA, and it could charge up to $1 million for approval of a device or the liquid used in it. Additionally, promotional materials cannot claim that vaping is less dangerous than smoking unless the FDA proves that claim, and free materials cannot be given away.

Recent court filings show that NJoy has $32 million in debt. Some of its struggles can also be blamed on the poor performance of one of its electronic devices. However, some argue that the new regulations will make it difficult for the company to rebound from the losses resulting from the failed product. As part of the bankruptcy process, the company plans to sell some of its assets in order to fulfill its obligations to its creditors.

Often, increased government regulations that require additional steps in order to sell a product can unexpectedly create problems for companies. Many companies in Oklahoma have likely experienced the same struggles. Often, seeking Chapter 11 bankruptcy protection can help struggling companies manage their debt regardless of the cause of their problems.

Source: phoenixnewtimes.com, "NJoy E-Cig Bankruptcy Casts Dark Cloud Over Vaping Industry", Ray Stern, Sept. 26, 2016

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