With a downed economy and not as many people going on vacation, some industries are having a tough time financially. However, filing for bankruptcy can give many businesses a second chance.
At least that is what Budget Portfolio Properties LLC is hoping. The Illinois-based company owns 22 hotels in six states, and just filed for Chapter 11 bankruptcy protection.
Chapter 11 gives businesses small and large the opportunity to reorganize debts. Under this type of filing, a plan on how to pay back money owed to creditors is presented to those who are owed in court. From there, if creditors approve the plan it becomes a contract, however, those creditors can also not agree and a new plan may be drafted. Or, in some situations a court will force the creditors to accept it.
In this Budget Portfolio Properties situation, the company owes at least $69 million in debt, and foreclosures have also been filed on all the hotels. Between those 22 hotels there are 375 employees.
However, those employees are still at work, and while lawyers for Budget Portfolio are busy working out a reorganization plan, the hotels will also remain open for guests to stay at.
An attorney for the Budget Portfolio said the company ended up having to file for Chapter 11 because the bank with the loans for the properties was unwilling to work with them, and now under a future reorganization plan that same bank may be forced to accept a plan.
The next courts date is set for Jan. 19.
Source: Chicago Daily Herald, “Area hotels to remain open while in bankruptcy,” Anna Marie Kurec, 29 Dec 2010