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St. Louis-based Furniture Brands International, Inc. may face bankruptcy, according to some analysts. The company has faced losses every year since 2007 and was especially hard hit by the housing market collapse in 2008. Because home furnishings are so closely tied with the housing market, if the housing market is down it depresses demand for new furnishings. The company has denied that bankruptcy is imminent, instead choosing to address its “liquidity challenges” with cost reductions, credit adjustments, and other ways to make ends meet until the company is profitable again. They hope to avoid needing a St. Louis bankruptcy lawyer to wind down or reorganize its debt.
For businesses saddled with too much debt, two types of bankruptcy exist for relief. These two bankruptcies are:
Chapter 7 bankruptcy for a business is similar to that of an individual. In that instance, a company’s assets are liquidated and any proceeds are used to pay down creditors through the St. Louis bankruptcy lawyer and the trustee. If any excess capital exists, they are returned to the company. Afterwards, the company will then cease to operate and the owners can move on.
In Chapter 11, however, a company’s debt is reorganized with the hope of returning to profitability. In this bankruptcy, a trustee takes over operation of the company and negotiates more favorable terms for loans or obligations. This way, creditors can be more fully repaid than under a Chapter 7 while allowing the company to work on improving its bottom line.
If you own a company that is facing insolvency, contact a St. Louis bankruptcy lawyer today. Options exist to help get your debt under control, allowing you to get your business back by negotiating with creditors. This will give you a new start and allow you to focus solely on the important job of running your business.