Running a business is a complicated and difficult task. Trying to run a business in a down economy is almost impossible. This unfortunately forces many business owners to file for business bankruptcy to get out from under the debt.
The most recent business that has had to turn to Chapter 11 is Sacramento's Le Rivage Hotel. The hotel opened in January 2008. Their opening at the beginning of the recession proved how difficult it is to survive a recession.
The hotel's parent company, Captain's Table Hotel LLC, filed for Chapter 11 bankruptcy in February. They listed their debts between $10 and $50 million. This filing stopped a foreclosure sale. One positive for filing for bankruptcy is that is stops all creditor collection actions. This includes both mechanic's liens and repossessions.
The Brighton Management LLC, a real estate company that focuses on property development and management, has closed a deal to buy the property and turn it into a Westin. The deal is worth about $16 million.
When owning a business, even small economic changes can substantially affect the business. A minor downturn can force an owner to put off payments to creditors which can lead to supplies being cut off and creditors pressuring the owner for money that is not there.
Under Chapter 11, the business can create a debt reorganization plan to work towards a solution to repaying the debts. In many cases, interest payments can be reduced and penalties and fees from late payments can be reduced or even eliminated.
Source: The Sacramento Bee, "Sacramento's Le Rivage hotel could become Westin hotel under new owner," Mark Glover, Dec. 12, 2012