A number of relief options are available for businesses with heavy debts. Depending on your financial situation and how your business is structured, there may be out-of-court solutions such as a negotiated settlement with creditors or debt restructuring. In other cases, the best option may be business reorganization through Chapter 11 bankruptcy.
Chapter 11 protection is the path chosen by the Costa Mesa-based restaurant chain Elephant Bar. The company, whose corporate name is S.B. Restaurant Co., has been in business for more than 30 years. However, changes in the casual dining market have increased competition, and Elephant Bar was forced to close 16 California locations in June.
As is the case in many Chapter 11 filings, Elephant Bar plans to keep its other restaurants open during bankruptcy proceedings. To that end, the restaurant chain is seeking approval of debtor-in-possession financing of $3.3 million.
According to the company, the purpose of the bankruptcy is eventually to finalize a sale of the business to a strategic partner. The company’s president and chief executive officer indicated that the 16 restaurant closures, in conjunction with the restructuring afforded through bankruptcy, will help the company re-focus on operations and branding.
The life of a business is often uncertain, even for companies that have been operating for more than 30 years. If your business is facing insolvency, then you should be aware of every available option for protecting your interests. Each debt situation is different, and having legal experience in your corner is often the key to ensuring a favorable outcome.
Source: Central Valley Business Times, “Elephant Bar files Chapter 11,” June 16, 2014