It does not matter how long a company has been in business: No business is immune to financial difficulties. For the owners, this of course can become quite stressful, especially in situations where the business has been in the family’s name for quite some time.
Take for example the recent news of Bakers Footware Group seeking a conversion from a Chapter 11 bankruptcy to a Chapter 7 bankruptcy. The current CEO, Peter Edison, is actually the grandson of the man who started the chain.
At one point, the company had 213 stores, with locations in Orlando, Pembroke and Miami. Shoppers can also buy shoes online. However, over the years the company has reportedly been continuing to lose revenues. In 2010 Bakers reported a $9.3 million loss, and in 2011, reported $11 million in revenue losses.
When looking at what happened, Bakers originally filed for Chapter 11 bankruptcy. The hope was that the company would be sold by Jan. 2 However, this never happened, which led to the company seeking approval to begin the liquidation process through a Chapter 7 bankruptcy.
In terms of the differences between Chapter 11 and Chapter 7, in the most basic terms, a Chapter 11 is when a business creates a payment plan to reorganize debt, while a Chapter 7 is when assets are sold off and the proceeds are distributed among creditors.
Each type of bankruptcy filing offers its own protections. In order to learn more and figure out which type of bankruptcy makes the most sense, Florida owners should speak with an attorney who has experience handling business bankruptcies.
Source: St. Louis Business Journal, “Bakers seeks conversion to Chapter 7 bankruptcy,” E.B. Solomont, Jan. 15, 2013