Individuals in Los Angeles are not the only victims of outstanding debt. Many businesses in the area, and all around the country, struggle to stay afloat after taking out loans — and the smaller that business is, the more difficult it can be to get out of the red. Even with the seemingly impossible task of paying the debt back looming over a business, the owners of the company should not panic. There are ways to manage your debt in a way that allows the company to survive, move on and even thrive.
Chapter 11 bankruptcy is the common form of business bankruptcy protection, and the best way to describe this type of bankruptcy is that it’s like a Chapter 13 filing for an individual. Filing for Chapter 11 allows a business to discuss things with their creditors, reorganize its debts and put new payment plans in place that fit their financial reality.
If the owners are looking to sell their business, a Chapter 11 filing can actually be helpful. Many may assume it would deter potential buyers; but a Chapter 11 filing helps manage a company’s debt. That means a buyer would not be saddled with as much debt as they would without the filing in place (or, at least, their payments could be more manageable).
The makers of the video game “Pong” are preparing their own Chapter 11 filing after their debts reached a critical point. Atari filed for bankruptcy protection in New York and France, where two of their major entities exist, claiming $28 million in debts. The company is seeking to split the New York and France firms into separate companies.
Source: Reuters, “Atari files for bankruptcy protection,” James Regan, Jan. 22, 2013