Many businesses in Missouri and throughout the country reported financial challenges in 2020. While some have been able to get things back on track, others have determined that they are no longer able to stay afloat and are taking steps to resolve debt issues and close their doors. Among those that are shutting down is a theater company on the West Coast that is preparing for Chapter 7 bankruptcy.
How Chapter 7 differs Chapter 11
There are several types of bankruptcy that can help a business owner alleviate debt. Each program has its own eligibility requirements, and one type of bankruptcy may better suit a specific company’s needs. Chapter 11 bankruptcy is a program that many business owners use because it enables them to restructure their loan payments while retaining ownership of their companies. Chapter 7, on the other hand, typically involves complete liquidation of assets, whereby the proceeds generated from liquidation are used to pay back lenders.
Why the theater company is choosing Chapter 7
A spokesperson for the West Coast theater company said that the company does not have the means to reorganize its payment plan and will, therefore, be filing for bankruptcy under the Chapter 7 program. The company will be selling equipment, such as popcorn machines, film projectors and theater seats as part of the liquidation process. While there is a possibility that the cinemas will re-open in the future, no such plans were formally announced at this time.
Individuals may also file for Chapter 7 bankruptcy
It is not only business owners who can file for Chapter 7 bankruptcy to relieve debt. Any adult individual in Missouri or some other state may seek debt relief for personal finances through this program as well. A person considering filing for this type of bankruptcy must take a means test in order to determine if he or she meets the income level requirements for the program. Someone well-versed in U.S. bankruptcy laws can explain more about the means test and additional regulations.