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Chapter 11 filings in Texas up over 40 percent in 2017

Like many cities in Texas, Tyler has a proud history of entrepreneurship and small business development. While that environment always comes with its ups and down, business owners can be forgiven if it felt like 2017 packed a harder punch than usual.

The fact is that almost as many Texas businesses filed for Chapter 11 bankruptcy in 2017 as did during the height of the recession following the housing market collapse: more than one thousand businesses. That was a spike of over 40 percent above the 2016 filing rate. This is in spite of a relatively strong economy and steady gas prices.

The reasons for these bankruptcies vary according to business sectors. Retail stores, for example, have been hit by shoppers' migration to online shopping. Senior care facilities and nursing homes have also struggled financially in the current healthcare industry. Restaurants always operate on narrow margins and may not necessarily do as well as the rest of the local economy.

Fortunately, filing for Chapter 11 bankruptcy does not necessarily mean the end of a business. Chapter 11 allows a business struggling with significant debt an opportunity to reorganize. If the court approves the business' plan to return to profitability, the business can take another run at success without the weight of debt holding it back.

The fact that so many Texas businesses are taking advantage of this form of protection should be understood in the context of what it means and what it can allow them to accomplish. A legal professional can help small business across a diversity of sectors understand how Chapter 11 may be able to help them return to profitability.

Source: Houston Chronicle, "Texas business bankruptcies skyrocketed in 2017," Mark Curriden, Feb. 27, 2018

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