Californians know that running a business can be a difficult but fulfilling profession. Entrepreneurship is what this country is built on. But with the rising costs of labor and material coupled with the slow economy, many businesses are struggling. It does not take long for a struggling business owner to quickly get behind on payments to creditors. One missed payment can quickly snowball into substantial debt. With substantial debt, business owners may turn to filing a for a business bankruptcy to solve their debt problems.
Many companies are able to emerge from bankruptcy without previously accumulated debt. This was the case for the Kansas plane maker Beechcraft. This company filed for bankruptcy protection in May. The bankruptcy also allowed the company to dump its unprofitable arm, the business jet operations. The company is now focusing on smaller planes and its military work.
The company is emerging from bankruptcy only two weeks after the bankruptcy courts approved their reorganization plan. They were able to cut their debt and get about $600 million in exit financing from their creditors. About 90 percent of the company is now owned by investment firms. The company has more than 5,400 employees at this time and is hoping that number will hold steady. A potential government contract for military planes may bring in an additional 700 jobs.
Bankruptcy puts an automatic stay on creditor collection actions. This includes repossession and mechanics liens.
The most common type of business bankruptcy if Chapter 11. Chapter 11 bankruptcy allows the business owner to create a debt reorganization plan. This allows for a reduction of interest rates and a reduction or elimination of penalties and fees associated with the debts.
Source: Sacramento Bee, "Beechcraft emerges from bankruptcy protection," Roxana Hegeman, Feb. 19, 2013