Florida-based Appliance Direct recently filed for Chapter 11 bankruptcy, citing a bad economy and the fact that consumers just aren't spending as much on home appliances as the reasons for the company's financial troubles.
In addition to the recession and people not spending as much as they used to, the company also cites an unsuccessful attempt at an expansion as part of the reason for the Chapter 11 bankruptcy filing.
On Thursday, Appliance Now Inc., Appliance Direct Management and eight of the retail giant's Florida locations all filed individual Chapter 11 bankruptcy notices in the U.S. Bankruptcy Court Middle District in Orlando. Appliance Now, which owns the stores' inventory and operates all of the businesses, is the lead in the bankruptcy case.
After the filing, the lawyer who is representing all of the entities said that all of the operations will be able to emerge from the bankruptcy, mostly because of a payment agreement that was worked out with Whirlpool Corp., which is owed $5.3 million and is the company's largest creditor.
Other creditors also include the city of Melbourne, the Florida Department of Revenue and multiple taxing agencies, as well as AT&T and Penske Trucking.
In the near future, Appliance Now and all of the entities will be making proposals for how to pay off the debt to all of the creditors.
With a Chapter 11 bankruptcy a business is able to reorganize its debt by coming up with a new payment plan that is either accepted by creditors, or in some cases even imposed on the creditors by a court. In addition to being able to reorganize, while the plan is being created, all repossessions and collections on a business are put on hold.
Source: Florida Today, "Appliance Direct files for Chapter 11 bankruptcy," Wayne T. Price, 26 April 2011