Texas businesses that are having financial trouble or that are seeking ways to stay in business on firmer financial ground may be thinking about a business bankruptcy. A business owner might recoil at the idea of Chapter 11 bankruptcy because of the unwarranted stigma surrounding it. However, there are a great number of businesses that have used Chapter 11 as a tactic to move forward and come back stronger than ever. Others have gone on with other businesses and been in a better financial situation.
In 2016 alone, there were more than 750 business bankruptcies in Texas. Texas had an increase of 42 percent in 2016 when compared with 2015. A great many of these were in Houston, and it is believed that the struggles of the oil and gas industry were a catalyst to some of these filings. There is a perception that 2017 will see an improvement in finances for these companies as experts expect a stabilization of prices and increased fairness for those producing this type of energy. The Organization of the Petroleum Exporting Countries is behind this apparent market stabilization.
Energy companies were not the only ones having financial issues. Tech companies have also seen their share of problems. Much like the search for energy in oil and gas and the inherent risk of not being able to make a profitable discovery, tech companies are constantly trying to create a new product, whether it be an app or something else. While the ones that succeed become household names, those that do not can result in failure, financial struggles and the need to file Chapter 11.
Any business that is trying to find, create or sell a product runs the risk of failure. Chapter 11 is a strategy to get back into a better situation and move forward. It also allows businesses to simply end the process and move on with something else. For those who are experiencing financial issues with their business, a reorganization under Chapter 11 can be a smart decision.
Source: kvue.com, "Chapter 11 filings up 42 percent in Texas in 2016," Erin Jones, Jan. 4, 2017