When a Florida business finds that it is facing great debt, it has several options regarding how to proceed. One of those options is to file for bankruptcy under Chapter 11. Often referred to as “reorganization,” under this type of bankruptcy the petitioner can create a debt restructuring plan to deal with its debt. That plan usually contains specifics regarding how debts will be repaid and may even eliminate certain types of debt. To work, the plan must be approved by the business’s creditors as well as the court.
Recently a Florida company sought debt relief under this chapter. As is the case in most bankruptcies, filings are the result of a variety of factors. In this situation, the power distribution panel and connectors manufacturer indicated that its debt is due to poor business during the recession and litigation involving the previous owners of the business.
Though the company reported an income of $12.3 million in 2013, it claims that its debt is greater than that. It owes a total of $13.74 million to three creditors.
While there are other bankruptcy chapters a business might decide to file under, there are reasons why Chapter 11 might be the most appealing. One of those reasons could be that under this chapter the business continues to operate while going through the bankruptcy process.
When it is a business that files for Chapter 11 bankruptcy, the benefits experienced could extend beyond that entity. The Chapter 11 bankruptcy this Florida business filed could be advantageous to the community it is based in as well, since area residents who work there will continue to be employed during the process. This keeps those individuals from experiencing financial difficulties themselves and contributes to a healthy economy.
As is the case anytime an individual or entity considers filing for bankruptcy to address financial difficulties, the best place to start is with a bankruptcy attorney. That individual should be able to assess the situation and based on the goals of the potential filer, determine the best way to proceed.
Source: South Florida Business Journal, “Davie electronics company files for Chapter 11”, Paul Brinkmann, Feb. 14, 2014
