Being a business owner is not easy. Decisions need to be made every day that could impact the long-term viability of the operation. Profitability is always the main objective, but it can be hard to manage a profit when employees need to be taken care of, contracts need to be honored and customers need to be satisfied. For some businesses, the finances simply get out of hand at times. When that happens, filing for Chapter 11 bankruptcy may be a good option in a bad situation.
Many businesses in the Escondido area and throughout California did their best to get through the economic recession that hit the country several years ago. The recovery from those difficult times has been easier for some companies than it has been for others, however. Unfortunately, not every business has been able to remain profitable or get out from under overwhelming debt. For some companies it may be time to think about filing for Chapter 11 bankruptcy.
Some of our Escondido readers may be familiar with the clothing retailer Frederick's of Hollywood, a company with a famous flagship store in Hollywood. The company specializes in lingerie, and for years was a popular spot in shopping malls across the country. Unfortunately, because of the constantly decreasing amount of shoppers at malls - and, as a result, less revenue - the company recently filed for Chapter 11 bankruptcy protection.
Our regular California readers may remember seeing a previous post here regarding the Chapter 11 bankruptcy filing by former electronics powerhouse retailer RadioShack. The company, hindered by changing consumer preferences that have seen many brick-and-mortar retailers lose significant ground to Internet-based companies, filed for Chapter 11 bankruptcy to presumably attempt to turn things around and remain in business. The most recent reports concerning the company's Chapter 11 proceedings indicate that several different options are still in play.
Whether they like it or not, some Escondido residents may come into contact with collection agencies at some point in their lives. Creditors are often willing to work with a borrower, to a certain extent, if a financial hardship arises, but if no solution is in sight, they will often turn to collection agencies to attempt to recover some of the debt that is owed.
When the decision makers at a company decide to file for Chapter 11 bankruptcy protection, the decision is often made only after a string of bad years, coupled with every effort to turn things around. For the well-known electronics company RadioShack, that certainly appears to be the case.
Many of our Escondido readers are probably familiar with the teen-oriented clothing retail chain known as "Wet Seal." There are several Wet Seal locations throughout the local area, and the company is actually based out of Orange County. But, it appears that this company, which has retail locations throughout the country, is facing some serious financial difficulties. As a result, the company recently filed for Chapter 11 bankruptcy.
Many of our Escondido readers know from seeing previous posts here that Chapter 11 bankruptcy is an option for businesses that want to turn around a financial situation that is getting out of hand. Chapter 11 is known as "reorganization" bankruptcy. Our readers also probably know that the bankruptcy process can be long and complicated. But what are the key steps in a Chapter 11 bankruptcy filing?
Personal debt is quite a bit different than business debt. For most individuals, Chapter 7 bankruptcy is the best solution for dealing with burdensome debt, because this process allows the filer to wipe out most debts and start from scratch. But, the perceived negative aspects of a Chapter 7 bankruptcy, like taking a hit on a credit score and losing assets, may not part of the solution for businesses. Businesses are oftentimes in a bit of a better position to correct their financial problems, and that is why many businesses go through the Chapter 11 bankruptcy process.
It is only natural for Escondido residents who are contemplating a bankruptcy filing to have quite a few questions about the process. After all, it is common knowledge that filing for bankruptcy is one of the most significant financial moves an individual or business will make, so it makes sense that every question should be answered before the filing proceeds. One of the most common questions is, "What is the difference between secured debt and unsecured debt?"