As we’ve talked about in the past, consumer demand largely dictates the market. This means if people’s buying choices change, companies and businesses that were once thriving can end up in tough financial situations continuing to go further and further into debt. This in turn can end up leading to lay-offs, which directly affects employees.
Recently, Patriot Coal Corp. was one of the latest companies to file for Chapter 11 bankruptcy in the hopes of reorganizing. Through this reorganization process the plan is for the company to continue its mining and shipping operations.
Right now it turns out many coal-mining companies are in tough financial spots as the U.S. demand for coal just is not what it used to be. Additionally, natural gas prices are also down as there was a boom in production, but a rather mild winter.
Patriot also points to the anemic economic conditions here in the U.S., and overseas, leading to more financial difficulties. This complaint is one that mirrors that of many businesses throughout the country.
In the past, as the company struggled, employees also took a hit as 1,000 jobs were eliminated.
When looking at Patriot’s financial hardships, the circle of debt is really illuminated in the fact that struggling businesses can lead to debt and lay-offs. Those employees who lose their jobs can then also find themselves unemployed and in turn struggling to pay their own bills, which can lead to debt pilling up.
Fortunately, while businesses can file for bankruptcy, consumers can also file for personal bankruptcy through a Chapter 7 or Chapter 13 in order to either reorganize or discharge their debts.
Source: The Washington Post, “Patriot Coal says it filed for Chapter 11 bankruptcy protection amid weakening coal sales,” July 9, 2012