Businesses in Texas and across the nation that are having financial issues or simply need to find a way to get their financial situations under control are well-advised to understand that Chapter 11 bankruptcy is a viable option. While there is an unavoidable fear with a business bankruptcy, it should be seen for what it really is: a tool to get back on stronger ground. A reorganization under Chapter 11 is a useful strategy for any business, even those that might, on the surface, appear to be successful with solid business contracts with established entities.
The company that handles towing operations for San Antonio has moved forward filing for Chapter 11 bankruptcy. In addition to working for the city, the company manages the impound lot that the city uses for towed vehicles. The company needed to file for Chapter 11 because it lost a lawsuit in another state. It had run the impound lot for nine years. In 2015, it was given the contract – worth nearly $9 million – to handling towing operations for the city.
When there is a stolen vehicle or damaged vehicle, the company subsequently sends a subcontractor towing company to pick the vehicle up. Which company does the subcontracting depends on where in the city the vehicle is located. The company has been allowed to continue operating and fulfilling its contractual obligations. In the filing documents, the company says that it owes money to towing subcontractors and vendors in the city. The impound lot is not owned by the company, but leased from the city. It pays commissions to the city for its work. The company plans to continue operating as it sells assets.
This is a case in which a company had a major contract with the city to handle its towing and oversee impounding of vehicles. Unfortunately, it lost a lawsuit and is dealing with financial problems because of it. Filing for Chapter 11 bankruptcy is a strategy for the company to continue its operations and try to right its ship. Those who are in a similar circumstance should make sure they understand the benefits of Chapter 11 and everything it entails. Discussing a potential case with an attorney can provide the necessary information to make an informed decision.
Source: news4sanantonio.com, “Company managing San Antonio’s towing operations files for Chapter 11 bankruptcy,” Jaie Avila, Feb. 16, 2017