It is always difficult to admit that debts have made a business untenable. Fortunately, that’s not as serious or as problematic as it seems. Businesses often declare bankruptcy to have the chance to reorganize their finances and satisfy their creditors, who have certain rights to expect repayment under bankruptcy protections.
A restaurant chain based in Florida has filed for bankruptcy under Chapter 11 of the United States Code. This particular type of filing generally allows businesses to keep operating while they work out their obligations to creditors.
In this case, a food distribution company is owed more than $1 million and the state of Texas is owed about $120,000 in applicable sales and beverage taxes. The chain is also requesting permission from the court to clear employees’ unpaid wages and the taxes on them.
One of the problems with the restaurant’s cash flow is a lien that the Internal Revenue Service (IRS) placed on the company the processed their credit card transactions. The restaurant now claims they will get the money they are owed to help handle their financial challenges.
Selling properties that the chain owns and releasing leased properties that are no longer profitable can help companies emerge from Chapter 11 bankruptcy. The opportunity to reorganize also helps creditors claim what is rightfully theirs.
Any lender or borrower with questions about bankruptcy and repayment can consult with legal representation. An attorney can help manage filings for bankruptcy or work with a court to ensure that a specific entity’s interests are covered by an agreement to repay debts over time after a judgment.