Many businesses, including some in Escondido, have regular contact with governmental regulatory agencies. While this is a concern that is larger for some more than others, any kind of regulation that specifies how certain aspects of a business need to operate are an important factor to consider in the cost of doing business. It appears that for one company in a Western state in particular, government regulations may have played a significant role in the company's recent Chapter 11 bankruptcy filing.
According to the reports, Sorenson Communications Inc., a company that provides video services to people with hearing disabilities, filed for Chapter 11 bankruptcy on March 2. The business bankruptcy filings listed the company's liabilities at $1.4 billion, with assets of $645 million.
While those figures may not seem all the bad in light of the status of many other companies' balance sheets, it seems that the decision makers at Sorenson Communications foresaw a significant problem on the horizon for the company. Apparently the Federal Communications Commission upped the minimum requirements for video services, and as a result Sorenson came to the conclusion that the company would not be able to comply.
Most people would probably agree that government regulations aren't intended to drive companies into a decision on filing for Chapter 11 bankruptcy. However, regardless of intention, that seems to have been the result with Sorenson. Now, as the company works through the Chapter 11 bankruptcy process, changes will need to be made in order to keep the business afloat. Whether the changes include debt reorganization or a change to the overall business structure and customer base, it appears as if this company will need to re-think its product and services.
Source: Reuters, "Sorenson Communications files for bankruptcy," March 3, 2014