Business & Commercial Bankruptcy

Nationwide Ambulance Provider Files for Bankruptcy

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

Business & Commercial Bankruptcy

Internet-based Company Files for Chapter 11 Bankruptcy

It doesn't take much of a change in the economy for a business to be affected. Once an owner falls behind with one creditor, it doesn't take much more to fall behind with most of them. This can leave a business in serious debt that the owner may or may not be able to get out from under. One available option to get out from the debt is to file for Chapter 11 bankruptcy.

Bankruptcy can give a business owner a means to reduce or even eliminate some debt. It also stops all creditor actions against the company, such as repossessions and mechanics liens.

YBT International, an online marketing company, filed for Chapter 11 recently in Illinois. The company listed their assets at $1.31 million and their debts at $7.18 million. The current business plan is to use the bankruptcy to reorganize and start again.

YBT currently is in agreement with a lender for the lender to provide a line of credit to the company to help pay off the debts.

YBT is an internet-based company that began by selling travel service websites to outside agents. In 2009, the company settled a lawsuit with the California attorney general over deceptive marketing.

In 2011, the company sold its headquarters and surrounding property when it faced a fall in revenue. Substantial management changes and canceled mergers have left YBT in its current economic situation.

Chapter 11 bankruptcy works with the creditors and vendors of the company that filed to create a solution to the mounting debt. Bankruptcy will allow the company to create a debt reorganization plan under the supervision of the court. Bankruptcy will reduce interest payments, and the penalties and fees may be reduced or even eliminated.

Source: St. Louis Business Journal, "YBT International files for Chapter 11 bankruptcy," Diana Barr, Mar. 5, 2013

Chapter 11

Sacramento-area businesses still seeking bankruptcy protection

The Sacramento, California, area saw a decline in small business bankruptcy filings for the first quarter of 2012. Compared to the first quarter of 2011, small business filings are down 27.4 percent.

Equifax, one of the nation's top three credit reporting agencies, says that 323 small Sacramento-Arden-Arcade-Roseville regional firms filed for bankruptcy protection in the first quarter of 2012, whereas 445 filed the same period in 2011. Many other regions nationwide have seen a similar trend, and Equifax predicts that small business filings will continue to decline.

The Equifax study analyzed Chapter 7, 11 and 13 filings of commercial entities of fewer than 100 employees. While this is may be a sign that the economy is improving, many small business owners may still be struggling in the current economic environment.

Filing for bankruptcy protection affords small businesses the chance to protect the owner's personal assets while restructuring to save the company. There are several types of bankruptcy that small businesses may file, including:

  • Chapter 11 bankruptcy: This filing allows the business to keep creditors at bay while working out a plan to reorganize the company
  • Chapter 7: Often called a straight liquidation, a Chapter 7 is the fastest type to file, but the business is shut down and not allowed to reorganize
  • Chapter 13: This filing allows a business to work out a repayment plan with some creditors (usually for secured debts) while relieving the business of other debts, depending on the amount that the business will pay back over the life of the Chapter 13 plan

For California business owners considering their options, dealing with complex bankruptcy issues may be overwhelming. However, resources are available to help determine the best path, whether it involves closing the company or reorganizing for future success. While overall trends are encouraging, circumstances that may often be beyond control can influence the decision to consider bankruptcy.

Source: The Sacramento Bee, "Small-business bankruptcies down in Sacramento region," Mark Glover, June 14, 2012