Running a business can be difficult in any economic time. But if the owner falls into hard times, it may cause the business the fall behind on debts. If the business falls too far into debt, the business owner may not have many options. One available option is to file for business bankruptcy. This is also known as Chapter 11 bankruptcy.
One of the minority owners of the Sacramento Kings recently filed for Chapter 11 bankruptcy. He is one of the last original owners of the Kings and is the only person standing between the Kings staying in Sacramento of the team moving.
The trustees for the owner's assets have potentially reached an agreement to buy him out of his ownership. The attorneys have asked to expedite the sale but the judge would not agree to the sale. This will potentially allow for other bidders, and the sale would possibly send the team to Seattle.
This halt on the sale would also allow the current owner the right to match the offer and regain ownership. There is a strong push by the residents and mayor of Sacramento to keep the team from leaving. The owner who filed for bankruptcy is currently trying to find a backer to help him match the offer made.
If a business chooses this option, it will immediately stop collection actions by creditors including repossession and foreclosure. It will also allow the business time to create a debt reorganization plan. This plan will often times result in lower interest rates and reduced or eliminated penalties or fees.
Dealing with debts and business problems can be problematic for business owners. Filing for a chapter 11 bankruptcy may be an option for some business owners who have fallen behind on their debts.
Source: KCRA, "Chapter 11 proceedings continue for Kings minority owner," March 27, 2013