How Filing For Bankruptcy Can Help Both In Selling And Salvaging Your Business
Many businesses are continuing to struggle since suffering major losses at the height of the COVID-19 pandemic. Mounting debts and lost profits may make closing your doors seem like the only possible option. Filing a business bankruptcy can provide a solution. In addition to eliminating debts and creditor claims, it can also provide a way to sell your struggling business.
Century Old New York Retailer Saved Through Bankruptcy Sale
A popular New York luxury home goods retailer that has been a staple in the city for over a century was faced with the prospect of closing their doors until a bankruptcy sale saved them. According to an October 27, 2021 Bloomberg Business report, ABC Carpet and Home suffered a drastic reduction in sales during the height of the COVID pandemic. While reopened and poised to come back the retailer, like many in the area, found itself in deep debt and facing mounting creditor claims.
The family-owned retailer ended up filing for bankruptcy in September of this year. After filing a petition, the company requested approval to sell itself to a group of investors. The judge in the case approved the sale, saying it helped to preserve the historic company and the jobs it created, minimizing economic impacts on the community while conforming with existing bankruptcy laws.
The sale is valued at $26 million, though a large part of this amount is estimated to be in the form of debt forgiveness. The company making the purchase says it will likely invest at least another $20 million in it and plans to offer jobs to more than 50 of the businesses current employees. It expects to break even the first year and make a profit thereafter. The former company itself will be debt free in the aftermath, with the granddaughter of the original owner holding a minority share in the new business.
Selling Your Business In Bankruptcy Proceedings
For businesses that are in trouble and considering closing their doors, filing a Chapter 7 bankruptcy can be the best possible solution. Referred to as a liquidation, it eliminates unsecured debts and allows you to surrender certain assets in order to satisfy creditor claims.
For a family owned business, it can help prevent being held personally liable for losses and subject to creditor actions, including repossessions and lawsuits resulting in property liens. It also offers the potential to sell your company at some point during the proceedings.
This can prevent financial hardships for employees and investors. Depending on how it is negotiated, it can preserve the name of the company and the hard work you put into it while still potentially leaving you with a partial ownership share.
Let Us Help You Today
Call or contact the Law Office of Harry D. Lewis online to find out more about how bankruptcy could help eliminate debts and salvage your business. To discuss the options, request a free consultation with our New York City business bankruptcy attorneys today.