There are many types of bankruptcy that a company may consider when seeking relief from debt. The type that is familiar most is Chapter 11, though if asked, many people may not know exactly what this form of bankruptcy entails. It may be helpful for companies, and at times individuals, in Kentucky to gain a basic understanding of this type of debt relief.
In the past, many in Kentucky may have considered filing for bankruptcy protection to be the end of the road for a company. However, in recent years, more and more companies have started to look at filing Chapter 11 as a way to rid themselves of unprofitable holdings and emerge healthy and viable. Recently, Last Call Guarantor LLC, a chain that includes the brands Fox & Hound, Bailey's Sports Grille and Champps, became the fourth such company to file for bankruptcy this year.
There comes a time when many businesses must make the smart decision to either drastically change their strategic initiatives or to seek other avenues in order to protect investors. At times, it may be prudent for a company to seek bankruptcy. Kentucky readers may be interested in a recent article written about Golfsmith International, which is seriously considering filing for Chapter 11 bankruptcy protection.
While some companies may find themselves in dire financial straits due to fiscal mismanagement, there are some corporations that are driven to seek bankruptcy protection because of factors that are completely out of their control. For example, there are many times when a sudden shift in the market occurs due to the introduction of new proprietary technology, or a dramatic change in demand ensues because of economic pressures. Readers in Kentucky may be interested in a recent story about the reasons that Essar Steel was forced to declare Chapter 11 bankruptcy.
When many in Kentucky think about filing for bankruptcy protection, they generally assume that a company must immediately cease operations. However, this is not always the case. A large hotel chain recently filed for Chapter 11 bankruptcy, and the judge presiding over the proceeding has allowed the company to continue normal operations while the court determines whether the company will be required to sell its assets.
Companies that seek bankruptcy protection are driven to that decision for a variety of reasons. For many, it may be due to the inability to nimbly change directions as required by the market. For others, the cause may be an unexpected award for the plaintiff in a legal dispute. The latter was the cause that required Gawker Media to recently file for Chapter 11 bankruptcy, and readers in Kentucky facing similar situations may be interested in the details of the case.
Sometimes, despite a business owner's best efforts, a small business ends up experiencing significant financial/debt problems. There are many different debt relief mechanisms a small business may have as options to try to address such struggles. This can include pursuing bankruptcy.