Business bankruptcy is available to provide helpful options for companies seeking to return to a successful history. A Tennessee-based restaurant recently announced it was filing for bankruptcy and closing 18 of its 25 restaurants in Tennessee. The plan to close underperforming restaurants is part of an overall plan to improve the financial performance of the restaurant chain. The company filed for Chapter 11 reorganization bankruptcy. The parent company for the restaurant chain has secured $25 million in bankruptcy financing for the restructuring plan.
The restaurant chain had a difficult first half of 2016. Foot traffic for the chain fell by nearly 9 percent and sales fell by 4 percent. As of last October, the restaurant chain had $525.4 million in liabilities and $12.9 million in cash. The bankruptcy filing provides that the restaurant chain has 25,000 creditors, $416 million in debts and an estimated $100 million to $500 million in assets. The restaurant chain also operates restaurants in other states.
Business bankruptcy is an option that allows a struggling business to reorganize and return to the profitability it once enjoyed. It also allows the company to continue to operate during the bankruptcy under most circumstances. In addition, like all bankruptcies, once a bankruptcy petition is filed, an automatic stay ends creditor collection actions and provides some breathing room for the struggling business.
Though bankruptcy can be a good option in many circumstances, it can also be complex and may include different choices and various requirements. Because of the helpful, but sometimes complicated, nature of the bankruptcy process, it is important when considering bankruptcy to understand how it works and how it can benefit a struggling company.
Source: The Tennessean, “Logan’s Roadhouse files for bankruptcy, will close 18 restaurants,” Kirk A. Bado, Aug. 8, 2016