Hotels and restaurants form the backbone of Florida's tourism industry. However, whether due to competitive markets, rising costs, a dependence on seasonal profits, effects of severe weather or more, Tampa business owners can find themselves managing an insurmountable amount of debt.
When options seem scarce, owners may wonder about the future of their hotel or restaurant amidst such serious financial troubles. Chapter 11 bankruptcy allows hotel and restaurant owners to declare bankruptcy yet keep their doors open. Often referred to as a "reorganization plan," it allows you the opportunity you may need to get a fresh start while preserving your business.
Who is eligible?
Chapter 11 bankruptcy is available to all businesses, hotels and restaurants, yet can be both an expensive and lengthy process. Corporations, limited liability companies (LLCs) and partnerships typically file for Chapter 11 bankruptcy. The Balance states that through the reorganization process, businesses develop a plan to regain efficiency in the business and pay creditors.
Regrouping and moving forward
To begin the process, you must file a petition with a Florida bankruptcy court. As the business owner, you become the debtor in possession. In cases where fraud or gross incompetence caused or contributed to the bankruptcy, a court-appointed trustee may oversee your operations.
Once you file the petition, the court will issue an automatic stay, which prohibits creditors from constantly harassing your business. For many, this alone provides the space necessary to start anew. You may then begin to develop a reorganization plan to repay debts, renegotiate contracts or leases and make other key decisions to keep the business afloat and develop a plan toward profitability.
In some cases, the court must approve big decisions. According to Investopedia, such decisions could include the sale of significant assets, the termination of key agreements, the decision to shut the doors of the business and more.
Determining the right option for your business
Chapter 11 bankruptcy can be a long, costly process. In some cases, Chapter 7 could provide a better long-term decision for your business. However, Chapter 11 can allow your hotel or restaurant the time it needs to regroup, remain operational and move forward. An attorney can inform you of the options most suitable for your business.