Nobody wants to see their business fail. Business owners invest their lives into something, and they understandably do all that they can to prevent it from going under. Unfortunately, if the business starts to fail, owners may find themselves struggling with debt. As these financial challenges become more and more overwhelming, owners may be left with no option but to file for bankruptcy.
Crystal Care Healthcare Services, a Minnesota company, has changed its bankruptcy filing, illustrating a situation that Ohio business owners could find themselves in. The company has been suffering financially for a while, and with the anticipated loss of state funding it has recently filed for Chapter 11 bankruptcy. The records state that the company’s debt was more than $5 million. More than $1 million of that debt was in wage claims spread amongst 749 workers. Realizing that it would be hard-pressed to pay the back wages owed to its employees, Crystal Care opted to file for the quickest and simplest form of debt relief, Chapter 7 bankruptcy.
While this case is taking place in Minnesota, it deals with some bankruptcy topics that residents of Ohio may face. In particular, the changing to Chapter 7 from Chapter 11 bankruptcy is of note. You may find yourself wondering what the difference is. Under Chapter 11 bankruptcy, a company can reorganize its debt while staying open. Chapter 7 bankruptcy is a form of debt relief that allows indebted people or companies to manage their debt by discharging some of it.
Given the circumstances, it’s understandable that Crystal Care chose to change its filing to Chapter 7. Rather than reorganize its debt, it opted for the possibility of stopping creditor harassment and getting a fresh financial start. The process usually only takes a few months and can wipe away some debts entirely.
Source: kstp.com “Crystal Care Home Healthcare Files Chapter 7 Bankruptcy,” Beth McDonough, Feb. 19, 2014