California residents and businesses alike have been hard hit by the difficult economy the country has faced over the last several years. While there has been some recovery, not every industry has been able to fully recover. Many have been left with debts that they cannot manage to pay off even with some economic growth. Many businesses have turned to Chapter 11 bankruptcy as a way to restructure their debt to make themselves more competitive in this new economic environment.
For example, one California winery has recently filed for Chapter 11 protections. According to reports, this winery sells 27 different types of wine and hosts special events. It sits on 41 acres, but currently only uses 18 acres as vineyards. The winery's attorney has said that the bankruptcy is the result of nothing more than falling behind on their bills -- something most California residents and businesses understand.
According to the bankruptcy petition, the winery has somewhere between $1,000,001 and $10 million in liabilities and the same number of assets. Its largest creditor is a claim on 21.6 acres of undeveloped land worth $983,000. The petition also includes disputed claims over winery memberships.
Unlike other forms of bankruptcy, Chapter 11 bankruptcy allows business owners to restructure their debt and keep the doors of the business open. The bankruptcy court will help the business create a plan to pay back a portion of the debt over the next several years. If the business sticks to the plan, the remaining debt will be discharged. In this rough period of economic transition, Chapter 11 bankruptcy can be a good option for businesses looking to succeed in the future.
Source: Sacramento Business Journal, "Winery seeks bankruptcy reorganization," Ben van der Meer, Dec. 2, 2013