Unfortunately, COVID-19 has resulted in many bankrupt restaurants. A lot of restaurants had to close their doors because of the pandemic and the social distancing regulations that were put in place. If your business has not been able to ride this storm, you’re not alone, and filing for Chapter 11 bankruptcy may be the right solution for your situation right now.
With that in mind, read on for our guide to filing for bankruptcy as a restaurant owner.
The Impact that COVID-19 Has Had on the Restaurant Sector
Over the past year, a lot of bars and restaurants had to shut their doors because local governors ordered them to do so. While many of these establishments have been given permission to reopen, the unexpected and sudden revenue loss has had lasting effects. A lot of businesses have not been able to ride this storm, especially small family restaurants that need to be open every day. Rather than closing indefinitely, filing for Chapter 11 bankruptcy may be the best solution for those who want to keep their restaurant doors open.
What Happens When a Restaurant Files for Chapter 11 Bankruptcy?
A lot of business owners assume that filing for bankruptcy means they will need to close their business for good. This is not necessarily the case. Chapter 11 is a type of bankruptcy that involves debt restructuring, as opposed to your assets being liquidated. The latter is Chapter 7 bankruptcy. Because of this, you could be able to keep your restaurant doors open. Nevertheless, there are a number of different rules you will need to follow to keep control of your business.
What to Expect When Filing for Chapter 11 Bankruptcy
So, what will happen should you file for Chapter 11 bankruptcy? If you file for bankruptcy, you will typically be permitted 120 days so that you can put together a plan for reorganization. The steps that you take within this four-month period can have a significant impact on the future success of your food establishment.
If you are considering going down this route, one piece of advice that we would give you is to avoid waiting until you are insolvent to declare bankruptcy. If your business is in trouble at the moment, the sooner you act and get in touch with our legal team the better.
Contact Us Today if you Need Help with Chapter 11 Bankruptcy
If your restaurant is going through a difficult period and you feel that Chapter 11 bankruptcy is a must, please do not hesitate to get in touch with our team at Aldrich Legal Services today. We have more than 21 years of experience in the industry, and our friendly and professional team is always happy to help. We look forward to hearing from you.