Last month, one East Coast publication company sought Chapter 11 bankruptcy protection after it was unable to pay off several high-interest loans it had taken out in recent years.
On Feb. 12., the company, Johnny Hanna & Associates LLC, filed papers indicating that its assets fell between $100,001 and $500,000 yet had debts ranging from $500,001 to $1,000,000.
Among the highest-owed creditors is the magazine’s “printer, backer and friend” who is owed nearly $80,000, along with almost $318,000 owed to the friend’s printing company.
Another quarter of a million is owed to a web of small business lenders, including Kabbage Inc., TD Bank NA, On Deck Capital and FC Marketplace LLC.
The loans were short term and had higher interest rates and were the debtor’s sole resource when he was in a financial bind. As he stated, “When you are drowning, you will grab any buoy you can.”
The decision to file for Chapter 11 bankruptcy for the company was made in order to shelter the company’s remaining assets.
Sometimes, a business owner sees the writing on the wall well ahead of time and has time to make changes that can salvage a company. But other times, market forces can convene to close the window of viability for a business without a drastic decision to file for bankruptcy. It might at first seem unpalatable, yet it can be the only choice that makes fiscal sense when a business is flailing financially.
Could a Chapter 11 bankruptcy save your business from going under? A Tampa bankruptcy attorney can review your case and offer some common-sense recommendations.