Michigan business owners take pride in their work in building a successful business. However, sometimes, certain measures must be taken in order to prevent a company from falling under. Bankruptcy is one such measure that many business owners choose to take in order to restructure their businesses and keep the company alive. With bankruptcy, there are many laws involved and business owners often have a number of options available to them.
As some business owners can likely attest to, staying afloat can be challenging, especially in today's uncertain economy. In order to survive, companies must always be turning a profit. One bad business deal or mismanagement of finances can cause a company's profits to crash. When this happens, business bankruptcy may be the best option.
In order to be successful, businesses need to turn a profit. In some cases, businesses are profitable because they fill a void in a specific niche market. For these businesses, they thrive because they are doing something that no other businesses has been capable of doing. However, when other businesses move into the niche, it can be harder for the original business to compete.
In our last Wayne County bankruptcy law blog post, we made a reference to the term "debtor in possession." Let's take a little closer look at the meaning of debtor in possession according to the U.S. Courts website. The following is intended not as specific legal advice, but simply as general information.
Sometimes a bankruptcy case involves a small business struggling to keep the lights on. Other cases involve a major business bankruptcy with much more complex business bankruptcy issues to address. In either case, however, there are some underlying fundamental issues that Wayne County residents should understand, no matter what point they are at in their businesses.
For Wayne County business owners, the idea of filing for bankruptcy may seem antithetical to the very entrepreneurial spirit that drives them. One wants to hold on, keep fighting even in the face of overwhelming debt. However, for many, business bankruptcy is just the opposite of giving up the fight: it's a last-minute tactic that can turn the game around, sometimes even faster than expected.
The cupcake craze of recent years swept Michigan just like every other part of the country. For one little East Coast bakery that first opened its doors in 2003, the national sweet tooth opened up opportunities to expand the business, even going public less than 10 years later. Crumbs was famous for its calorie-packed cupcakes, which sold for around three or four dollars apiece.
We've discussed a number of business bankruptcy cases in recent weeks on our Wayne County bankruptcy law blog. The latest involved a national restaurant chain emerging successfully from Chapter 11. However, one recent example of a commercial bankruptcy right here in Michigan highlights the importance of a sound reorganization plan when filing for Chapter 11, and the consequences of failing to develop one in the time allotted.
Many Wayne County residents understand that it is possible to rebuild one's finances and become stable - even successful - after filing for bankruptcy. The same is true for businesses that file for bankruptcy under Chapter 11. Unlike Chapter 7 which means the end of the business and liquidation of assets, Chapter 11 business bankruptcy allows companies to reorganize and continue operating without the burden of debt weighing them down.
As the news of Michigan's largest city declaring bankruptcy has been developing, we've been following the story to see how it might impact Wayne County residents and others around the state. Detroit's decision to file for bankruptcy did not come as a surprise to many in the area since the city's financial troubles are well-known. Just like a business or a family that has fallen on hard times and struggled to recover, the city of Detroit must now focus efforts on getting back on its feet, paying back debtors, and charting a path towards a brighter future.