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Christian book store creditors to vote on Chapter 11 bankruptcy

Michigan residents may be aware that Family Christian Stores, a Christian gift and book store, is currently working through the Chapter 11 bankruptcy process. In this newest step, the company's creditors will elect on August 7 whether to approve a proposed Chapter 11 bankruptcy plan. This election would let Family Christian Stores' creditors vote on a plan, which must be approved by 51 percent of those voting in the election and 67 percent of the amount of money represented by each vote.

Currently 266 Family Christian Stores are present in 36 states. It is hoped that the company's bankruptcy will be resolved by mid-August. This will allow the company to prepare for the upcoming holiday shopping season. In this newest move, the company would be bought by Family Christian Acquisition for approximately $52.4 million to $55.7 million. Family Christian Acquisition will not take on the debt currently owed. Although the plan would cost the company millions, it seems that many creditors still favor it, as it will allow the stores to stay open.

Chapter 11 bankruptcy is also known as "reorganization" bankruptcy, because it lets businesses that are carrying more debt than they can pay off enter into a plan that will allow the business to become profitable again. By estopping creditor collection activity, Chapter 11 bankruptcy can let companies cut costs, expand their revenue and formulate a plan to repay their creditors, at least in part, so that they can stay in business.

Although it may seem like only large businesses can enter into a Chapter 11 bankruptcy plan, in truth it is available to small businesses as well. Therefore, any business owner who is finding themselves drowning in debt may want to consider learning more about the Chapter 11 process, so they can determine if commercial bankruptcy is an option for them.

Source: MLive.com, "With an eye towards Christmas, Family Christian Stores sets August vote on bankruptcy sale," Jim Harger, July 10, 2015

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