Different bankruptcy options are available to help businesses and people struggling with debt during hard times. Payless ShoeSource, shoe retailer, recently filed for bankruptcy protection and will be closing 400 stores, including 50 in California, as a result. The shoe retailer announced it will begin immediate liquidation in the stores that are closing. The company plans to reduce its debt by 50 percent and has lenders to provide funding to keep the company operating during the Chapter 11 bankruptcy process.
In some circumstances, a Chapter 11 bankruptcy may be converted to a Chapter 7 liquidation bankruptcy. Chapter 11 bankruptcy protection is a reorganization bankruptcy option for businesses, while Chapter 13 bankruptcy is a reorganization bankruptcy option for individuals. A Chapter 13 bankruptcy may also be converted to a Chapter 7 liquidation bankruptcy in some circumstances.
Chapter 7 bankruptcy for businesses and Chapter 7 bankruptcy for individuals share in common that they are a liquidation bankruptcy process during which assets can be liquidated to repay creditors. This differs from reorganization bankruptcy options. The Chapter 7 bankruptcy process for individuals provides some protections for certain assets and categories of assets through Chapter 7 bankruptcy exemptions. Based on the concerns, needs and goals of the business or individual seeking bankruptcy protection, different options are available.
The bankruptcy process, and deciding on the best option for the situation, can be complex. It is important to thoroughly understand the different options available based on the circumstances so that the business or individual seeking debt relief can enjoy a fresh financial start.
Source: Los Angeles Times, "Payless ShoeSource is shutting these 30 stores in Southern California," April 5, 2017