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Company awaits bankruptcy judge's decision on its future

The bankruptcy courts exist to help people break free from their overwhelming debt. It can be a way for people to get a fresh start in their lives. However, bankruptcy can do the same thing for businesses. Chapter 11 bankruptcy, and other business bankruptcies can give businesses a fresh start after facing financial difficulties.

Christian retail book giant Family Christian Stores filed for bankruptcy protection in February as it faced $127 million in debt. According to reports, the retail chain was never able to recover from losses suffered during the Great Recession. Additionally, the company has faced declining sales and profits due to a shift from paper to electronic media. In 2008, the company made $305 million, but in 2014, the company only made $230 million. The book chain is expected to make around $216 million this year.

A bankruptcy judge is now in the process of determining the future direction of the company. Two options are on the table. In the first option, the company will be purchased and allowed to remain open. In this scenario, the buyer -- and Family Christian Stores' largest creditor -- will purchase the company for between $42 million and $43.6 million.

In the second option, the company will be sold and liquidated. Proponents of this option say that the liquidation would be worth between $54 million and $58 million. This would give the court more money to pay creditors and is being pushed by another large creditor of the company.

The bankruptcy judge will determine the best plan of action. In a Chapter 11 bankruptcy, the judge wields a lot of power. Michigan businesses need to make sure they understand the legal ramifications of a judge's decisions during the process. With the right help, this understanding may allow a business to get a clean slate and start over stronger than ever.

Source: mLive.com, "Family Christian Stores CEO trusting in God as bankruptcy decision looms," Jim Harger, June 4, 2015

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