Sometimes businesses grow quickly and experience phenomenal business results for a long time, and then start to lose money and customers as other companies pop up. Unfortunately, even a higher power couldn't save popular religious chain Family Christian Stores from filing for Chapter 11 bankruptcy. The company, which has stores in Tennessee and 35 other states, experienced a major decrease in cash flow starting six years ago, after the recession hit.
Despite Family Christian Stores' business bankruptcy, the company plans to keep all the stores open, with no employees expected to be laid off at this time. The company has 3,100 employees in 266 stores. Family Christian Stores generated $230 million in 2014, $75 million less than in 2008. After that time, the company's debt load increased due to the digital revolution, which has led consumers to purchase fewer hard copy publications and move more toward Kindle and other forms of online reading. Another reason for the company's financial woes is an unexpected decrease in the sale of Christian fiction from 2013 to 2014.
After the bankruptcy is approved, the company hopes to restructure by reinvesting in its stores to bring consumers faith-based products that meet their needs. Family Christian Stores has nearly $100 million in debt, including $58 million owed to secure creditors and another $40 million owed to publishers. The company also owns two other companies, which are not part of the bankruptcy: Giving Films, a Christian movie production company, and iDisciple, a Christian digital content company.
Chapter 11 bankruptcy is beneficial for businesses because it allows them to stay in business while they come up with a plan to reorganize. However, the process can be costly and time-consuming. In addition, the court must approve the plan. There are pros and cons for every type of bankruptcy, however, so it's up to the company to choose the right one for its needs.
Source: Christian Examiner, "Family Christian Stores files bankruptcy," Karen L. Willoughby, Feb. 20, 2015