Businesses in Texas and across the country often face financial struggles that lead to them considering Chapter 11 bankruptcy. While the mere word “bankruptcy” implies that individuals or businesses are trying to get their financial circumstances organized so they can move on with their lives, it is important to understand the nuances of various forms of bankruptcy. With a business bankruptcy, the reorganization under Chapter 11 is a strategic option that can save the business.
A restaurant that was based in Philadelphia with more than 100 locations across the country and specializes in reasonably priced salads, sandwiches and soups has reopened a location in Texas after going through debt reorganization through Chapter 11. The company had originally opened in the state in 2008, but the franchisee was not able to continue operating the restaurant because of a sickness in the family.
The company is planning to open 15 restaurants in the state. A filing for Chapter 11 was made early in 2015. According to the company, this did not have a negative influence on the franchises. It was a tactic that was meant to deal with debts that included a significant amount — more than $10 million — to a stakeholder. The company was acquired early in the summer of 2015 by an investment firm in New York.
The conventional wisdom regarding bankruptcy for those who might have an ingrained belief of what it means is that it is a tool to get out of debt that they can no longer pay and would like to try and find a way to retain certain properties when their personal finances warrant it. Examples include a person’s homes and automobiles that cannot be seized as part of the process. For those who are operating a business, a business bankruptcy tactic such as Chapter 11 is a viable option to reorganize their debt and continue the business with a better grasp on what they owe.
In the case of the restaurant chain, a series of unexpected and unfortunate circumstances led to the closure of their original location in Texas and they were not operating in the state for years until they reopened in 2015 with numerous other locations planned after their Chapter 11 filing. Those who have a business and would like to gather information as to how a Chapter 11 bankruptcy should explore their legal options.
Source: Dallas Business Journal, “Exclusive: Emerging from bankruptcy, Saladworks re-entering Texas market with new Irving restaurant,” Korri Kezar, Oct. 9, 2015