One of my favorite restaurants, Sweet Tomatoes/Souplantation (parent company Garden Fresh Corp.), recently sent me an email saying they had closed their doors. I checked their website for other locations, only to find that they were no longer in Utah (my home state), Anywhere! I was baffled because our location was always busy whenever my husband and I went there for dinner.
That’s why a featured article in Credit and Collection News, Oct. 11 – Commercial Bankruptcies Soar 38% As Debt Crushes Businesses, caught my eye. A bolded paragraph stated,” The restaurant industry has been hit particularly hard with bankruptcies following the filings of Garden Fresh Corp., Cosi Inc, Logan’s Roadhouse. It then went on to list the nine restaurant companies, representing 14 chains that have filed for bankruptcy since December. The information came from Wolf Richter, editor of the Wolf Street blog. He called this “an ominous sign of a weakening economy.,,,“Rising bankruptcies are an indicator that the ‘credit cycle’ has ended.”
So besides the fact that some of us can no longer eat at our favorite restaurants, what does the rise in commercial bankruptcies mean for commercial debt collection?
Commercial debt is any debt owed by a commercial venture or business. It is common for businesses to accumulate a great deal of commercial debt especially when first starting out or when expanding too quickly, as may have been the case with Garden Fresh Corp. Commercial debt counseling, commercial debt consolidation, and commercial debt settlement are alternatives to bankruptcy for businesses struggling with debt that is past due.
Many business file for Chapter 11, as Garden Fresh Corp has done. It provides various options to reorganize debt, i.e., by repaying some debts, canceling others and restructuring the remainder. Because successful commercial debt recovery is frequently about speed, you should speak to an experienced business and commercial law attorney to help you decide the best way to get your client’s debts repaid in the event of a filing for Chapter 11. An experienced lawyer can help you determine if the only way to collect the debt is to compel the debtor to pay by formal proceedings.
At article on the website of Spector & Bennett states, “The commencement of formal proceedings itself is only a half measure. Many debtor businesses view the commencement of formal proceedings as an opportunity for months or years of additional stalling and stone-walling. For example, in a litigation scenario, the filing of a lawsuit should be accompanied by an Application for Writ of Attachment that will be heard by the court within 30 days, the granting of which will essentially lock down the debtor’s ability to conduct business and deeply embarrass the business to its customers and clients, making quick resolution likely. Should the debtor business be truly unable to meet its obligations, the attachment lien will often place the creditor business ahead of other competing creditors for payment.”
If you are a commercial debt collector who is looking for an attorney with experience in all aspects of bankruptcy and insolvency, including creditors’ rights, debt restructuring, trustee litigation pertaining to Chapter 11 reorganizations, Chapter 7 liquidations and assignments for the benefit of creditors, and more, The National List of Attorneys can help to match you with a law firm that has just the specialty and experience that you need. You don’t have to look at bankruptcy as a brick wall preventing you from collecting commercial debts. Go to our website, www.nationallist.com, or call us today at 800.227.1675.