Despite what many people in Pennsylvania think, seeking protection from creditors does not have to be the end of a company. In fact, filing for bankruptcy offers businesses a chance to reorganize their assets and holdings in a more efficient way, and sometimes the corporations emerges stronger and better prepared to deal with the ups and downs of the marketplace. Nevertheless, the rising number of commercial bankruptcies has some economists alarmed.
According to reports by the American Bankruptcy Institute, 28,789 businesses have filed for bankruptcy so far this year. The report indicates that this is the 11th month in a row that the number of bankruptcies has increased. Economists feel that six years of easy credit offered by the Federal Reserve created a situation where businesses were urged to borrow money. As a result, many of the companies that took advantage of the loans are now overwhelmed with debt.
After the 2008 recession caused by the bankruptcy filing of Lehman Brothers Holdings, Inc, the number of businesses seeking debt relief soared before leveling off early in 2010. Bankruptcy protection filings declined for several years until the recent surge starting late in 2015. Apparently, the food services industry is feeling the pinch the hardest. Fourteen restaurant chains have filed for bankruptcy since December of last year.
Bankruptcy is a viable way to find relief from the burden of debt. However, many people who own businesses in Pennsylvania may have questions and misconceptions about the process and purpose of filing for bankruptcy. The best way to understand more about the benefits of restructuring a company's debt and the options available to business owners is to contact an attorney with experience in bankruptcy law.
Source: newsmax.com, "Commercial Bankruptcies Soar 38 Percent as Debt Crushes Businesses", R Williams, Oct. 11, 2016