Running a business at any time can be difficult and stressful. However, over the last few years, running a business has been nearly impossible. It does not take very many missed or late payments for a business to be in financial trouble. This may leave the owner with few options to get out of debt. One option is to file for business bankruptcy. This is a way for business owners to get out of debt while also allowing the owner to reorganize.
An ambulance operator, Rural/Metro Corp., filed for Chapter 11 bankruptcy protection last week. The company continues to provide ambulance services but is facing substantial debt.
Rural/Metro is based in Arizona and provides emergency services nationwide. The company missed an interest payment in July, which lowered their debt and credit rating. The company filed for bankruptcy in Delaware; they listed their assets and debts at almost $500 million.
It does not take many missed or late payments to cause substantial problems to the business, which then causes many business to face the possibility of bankruptcy. One of the benefits of bankruptcy is that all creditor actions are stopped when the business files for bankruptcy protection. This includes mechanics liens and repossessions.
Bankruptcy also allows the company to create a debt reorganization plan. In many cases, this plan will reduce interest payments. It may also reduce or eliminate penalties or fees that were accumulated under the late or missed payments.
Filing for bankruptcy protection can significantly turn the ability of the business around to allow it to continue to operate. It can provide the business owner needed relief to prevent the loss of his or her business.
Source: Buffalo Business First, "Rural/Metro to continue services after bankruptcy filing," Aug. 5, 2013