Many Appleton residents dream of starting a business. It is definitely a reachable dream. However, when the American economy takes a downturn, some business owners can find their businesses challenged with overwhelming debt they cannot pay. A business bankruptcy also known as a Chapter 11 bankruptcy is a form of debt relief that is available for struggling businesses.
According to sources, one particular business that realized the American dream of business ownership back in 1933 is now facing financial challenges. The business began as a humble pawn shop and grew into a fine jewelry store. According to court documents, the business is nearly $2.2 million dollars in debt and cannot pay its creditors due to its current financial challenges.
Court documents also reveal that most of the business’ $1.3 million dollar assets are comprised of inventory and the value of the business is far less. From its inception, the business remained a family business until it was sold in 2006 to its current owner. As a result of its current financial hardships, the business is now in receivership, which is similar to a business bankruptcy and offers a measure of debt relief.
Chapter 11 bankruptcy is a viable debt relief option for businesses facing financial challenges and overwhelming debt they are unable to pay. Chapter 11 allows the business to continue running and also allows the owner to reorganize the business to increase its profit while halting the debt collection efforts by its creditors. During the reorganization process, someone acting on behalf of the business can renegotiate contracts and leases to make them more affordable, have certain debts discharged and reduce others. The creditors are generally divided into statutory priority and repaid according to their priority. Debts are also divided in terms of secured and unsecured with secured debts receiving a greater priority. Overall, an approved plan will modify the amount and terms of repayment to each creditor.
Just like individuals, businesses can also run into financial challenges that make it impossible to repay debts. Appleton business owners have debt relief options under these circumstances. A Chapter 11 bankruptcy is available for businesses facing financial challenges and overwhelming debt.
Source: Journal Sentinel, “Stein’s Jeweler’s goes into receivership, remains open,” Rick Romell, May 8, 2013