Companies in Pennsylvania who want to protect their businesses from looming losses sometimes opt for the reorganization process of Chapter 11 bankruptcy. Sports Authority -- a chain of retailers with over 460 stores across the country -- has recently filed for Chapter 11 bankruptcy. This followed the company's disclosure last month that it had failed to pay a $20 million debt.
The company revealed that many of its stores are not profitable, and filing for bankruptcy will allow it to cancel those leases and either sell or close the stores. In Chapter 11 bankruptcy, the debtor typically retains possession of the assets and business operations may continue during the reorganization process -- although certain basic obligations must be met. The debtor will be known as a debtor in possession and will be allowed to continue to make critical business decisions.
Sports Authority said its stores would remain open for business during the reorganization process. Its website will be functional, and warranties will be honored. Chapter 11 bankruptcies give businesses of any size the opportunity to overcome financial distress. The process will put a stop to debt collection, lawsuits, foreclosures and repossessions.
Pennsylvania business owners who feel financially threatened may benefit from consultations with legal professionals. An experienced bankruptcy attorney can assess the unique circumstances of the company and help to determine whether Chapter 11 bankruptcy reorganization is a suitable remedy. A lawyer can assist in creating a restructuring plan that will appropriately address debt obligations and afford the client the opportunity to get the business back on track.
Source: mysuncoast.com, "Sports Authority files for bankruptcy", March 3, 2016