Businesses face many challenges but can also reap several benefits. Business owners must manage all the issues that arise in a business such as submitting and paying for orders, hiring and paying employees, paying rent or buying the location. Business owners also get the satisfaction of being their own boss and managing it how he or she wants to manage it. But business owners can also be affected by changes in the economy. For example, the recent economic downturn has forced many business owners into business bankruptcy because they see no alternative way out of the debt they are dealing with.
A local family owned business in Northern California, Mi Pueblos, has filed for Chapter 11 bankruptcy. This grocery store chain has filed because of a dispute with a secured creditor. The chain has indicated that it is not currently defaulting on any obligations.
The grocery chain has stated that customers will not be affected by the change, and employees will still be paid and stores will remain open. The filing has just caused them to go through reorganization in order to deal with their creditor.
Filing for bankruptcy places an automatic stay on all creditor actions. It also stops all liens and repossession of business property. Filing for bankruptcy also allows the business to create a debt reorganization plan. This creates a repayment plan for the business to repay their debts to creditors and vendors. In many cases, interest payments and fees may be reduced or even eliminated.
Businesses require significant cash flow to operate and pay expenses including payroll and orders. When this is impaired by events such as a recession or business disaster, debt relief such as filing for bankruptcy may be the best option. The first step is to understand the options the business has. If they qualify, a knowledgeable professional will be able to guide them through the process efficiently and effectively.
Source: CBS SF Bay Area, "Mi Pueblo grocery store chain files for Chapter 11 Bankruptcy," Mike Colgan, Jul. 22, 2013