For Texans, it takes a great deal of self-confidence and faith to start a business. There are numerous potential hazards when trying to make a product or service successful and there are instances when even the best idea for the most popular activity has certain issues that make a financial restructuring necessary. Although the news will frequently focus on a large company moving forward with a Chapter 11 bankruptcy, a business bankruptcy under Chapter 11 is a useful tactic for businesses small, medium and large. Understanding how to go about it is one of the key factors to success.
A golf supply company based in Texas has filed for Chapter 11 bankruptcy. The company, Golfsmith, states that it will continue its United States operations as the process moves forward. The company had been purchased by a different golfing supply company in 2012 making the combination one of the largest such companies in the world. Golfsmith accrued debt of close to $200 million as it sought to expand. In its Chapter 11 filing, it said that it has assets and debts for an amount as high as $500 million.
The company’s struggles were exacerbated by the declining number of people who are taking part in golf-related activities. The number of people who golf has reduced over the past five years by more than 1.5 million. Other companies that provide similar services have also run into financial trouble in recent years as a result of diminished interest in golf. The company is set to close a number of its stores in the U.S. and seeks refinancing of the debt. It is hoping to find a buyer, but a liquidation is possible.
This is a case study of an attempt to improve the business and having financial issues that can only be solved through filing for Chapter 11 bankruptcy. A business owner needs to know the options when problems arise and Chapter 11 is a perfectly viable one. Consulting with a lawyer about the benefits of Chapter 11 can provide information as to how to proceed.
Source: golfweek.com, “Golfsmith files for Chapter 11 bankruptcy protection,” Jason Lusk, Sept. 14, 2016