Any business owner operating in New York understands the risks involved with expansion and debt. In some cases, the circumstances of what is owed and when will make it necessary to consider filing for bankruptcy. With a business bankruptcy, it is not the same as a bankruptcy in which an individual is trying to clear debt. Most businesses will be able to use debt negotiators to complete a business reorganization to get back on stronger ground. Understanding the value of this is key to keeping a business afloat in trying times.
The supermarket Fairway, based in New York, has moved forward with a Chapter 11 bankruptcy. There are 15 locations of the store in New York and the filing is an attempt to lower its debt by approximately $140 million so it can restructure and keep its employees on the payroll. The decision to file came as no surprise as it had been reported a month before it became official. The assets of the company are estimated to be $100 million to $500 million and the liabilities are the same. The company went public in 2013 and has lost money in every quarter since.
Any business large or small can run into financial issues. These can stem from a lack of sales, the unanticipated purchasing of necessities, an expansion, and loans that are no longer tenable. It is with this in mind that Chapter 11 is a viable option. It may offer the opportunity for a business to stay in operation and renegotiate its debt to a level and terms that are more preferable to help both the creditors and the debtors. Creditors are often willing to take part in a renegotiation because the Chapter 11 will help them as well as the debtor. The business does not want to fold and the creditors do not want to be left with nothing. It is then that a business reorganization is the best bet.
In the case of Fairway, the company wants to continue operating without having to fire employees in cost-cutting maneuvers. With its debt in the position it is in, Chapter 11 may be the wise option to move forward. Those who have a business large, medium-sized or small, private or public, can benefit from understanding the benefits of Chapter 11. Speaking to a lawyer experienced in such matters can help.
Source: NBC News, “New York’s Fairway Grocery Chain Files for Bankruptcy Protection,” May 3, 2016
