The fear and trepidation that people in Texas who are running a business and having financial issues feel is often compounded with the stigma that they believe surrounds filing for Chapter 11 bankruptcy. Gathering the information that is important when considering a reorganization under Chapter 11 can help assuage concerns and make an informed decision that a business owner needs to move forward with better financial certainty with the business still operating. It can even help with selling the business and move on completely.
An entertainment company with its base of operations in Texas has decided to file for Chapter 11 bankruptcy and will try to sell the company. The company currently has 127 stores spanning over 20 states. It has stated that gift cards will not be honored after July 13. The president and chief operating officer says that it will also cease accepting and honoring deposits that were made for purchases of future movies. Existing deposits can be used to purchase items in store. There will be no game rentals and the buyback program that the company had is suspended.
The decision to file Chapter 11 stems from the company not having the requisite cash to keep up operations. Using Chapter 11 to facilitate a sale can help the company to get its maximum value for those who hold a stake in it. The stores will stay open for 30 days in which it hopes to find a buyer. If it does not find a buyer, the entire chain might close. The company had been family-owned for over four decades and was sold for $21.4 million in 2014. The reason for the bankruptcy is that there is a diminished demand for its products including games, movies, music and books.
Whether a business is large or small, has a great number of locations or is operating in a single place, financial factors will come to the forefront. In some cases, a Chapter 11 filing is useful for the company to stay in operations under its current ownership template. In others, it is to help with a sale. Regardless of the situation, those who are facing financial turmoil in their business should understand how Chapter 11 can help a business owner get back on solid ground and move on without a financial cloud hovering overhead.
Source: gctelegram.com, “Hastings Entertainment files for bankruptcy,” June 24, 2016