A pawn company in another state recently decided to file for bankruptcy. The company is seeking Chapter 11 bankruptcy protection due to succumbing to growing competition from internet-based companies. When a company in Massachusetts or elsewhere cannot stay afloat financially, this type of bankruptcy filing may be its ticket to survival.
The pawn company that has filed for bankruptcy protection operates a total of 23 pawn shops in multiple estates. The company currently owes anywhere from $10 million to $50 million. It has under 1,000 creditors.
The founder and president of the company said that his goal was to reorganize the business and thus allow the company to emerge from Chapter 11 bankruptcy stronger. The company will continue to be open for business as part of the bankruptcy filing. No restructuring plan has yet been created, so there are currently no details about which existing stores will close or if some jobs will have to be eliminated.
Sometimes the market for a product changes due to a shift in customer demand, or the economy might struggle. These factors can easily cause a company’s liabilities to end up surpassing its assets. In this situation, filing for Chapter 11 bankruptcy can be helpful, as it provides business owners in Massachusetts and other states an avenue for reorganizing their debts so that they increase their chances of being prosperous in the future. It is especially helpful for businesses that are facing collection action, as creditors cannot pursue either new or existing collection activities against a business that has filed for bankruptcy.
Source:Â duluthnewstribune.com, “Pawn America files for Chapter 11 bankruptcy protection“, Dee DePass, April 14, 2017