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Chapter 11 can be a useful friend to a small business startup

Environmentally conscious companies here in Pennsylvania may have a higher overhead due to the greater expense of complying with their special preferences for growing and manufacturing a product more naturally.  Such companies may also find it difficult to survive economically as startups due to increased expenses and lower revenues in the first few years. That is why it is somewhat common to see some young startup companies floating in and out of Chapter 11 bankruptcy proceedings to try and stay above-water.

An interesting example is the Hellbender Brewery, which follows some rigorous and unique procedures in its brewing process. The business is approaching the end of its second year of operation.  The brewery, for example, has partnered with American University's Office of Sustainability to find local farmers who will take their spent grain and use it as livestock feed and compost.

The District of Columbia business recently filed for Chapter 11 relief in the bankruptcy court. The company reportedly owes about $135,000 to creditors, which is a modest amount in relation to most business bankruptcies. The filing may be of some comfort to other small businesses with financial struggles.                                                  

The company circulated a press release stating that it expected to "come out" of the Chapter 11 much more competitive and with greater support. It stated that problems with its distributor had to be ironed out and its current financial obligations had to be restructured. The company appears to have faith in the bankruptcy process as a "reorganization" tool, and it respects the ability of the bankruptcy court to assist a company to re-tool itself. In Pennsylvania and all other jurisdictions, small businesses may find that bankruptcy remedies are an extremely helpful way to get back on one's financial feet and moving forward again.

Source:, "Hellbender Brewing Files for Bankruptcy", Laura Hayes, Nov. 2,. 2016

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