3 Recent Large Scale Corporate Bankruptcies
When we think of bankruptcy, we often have in mind a person that cannot make ends meet, but there are many kinds. Companies have to make ends meet too and when they cannot, people get laid off, assets get liquidated, and people end up in court. Corporations are not immune to financial stress. Here are some recent large-scale bankruptcies you may have heard about in the news.
There is a good chance you have been to or at least seen a Houlihan’s resteraunt. They have been a chain since 1972. High rent costs and growing competition have caused the chain to experience financial stress. This stress came to a boil this year and the company filed for Chapter 11 bankruptcy protection. The chain took out a $42 million loan in 2018 and stopped paying on it. The owner and CEO agreed to buy Houlihan’s assets for $41 million as part of the Chapter 11 proceedings. This restructuring does not necessarily mean the chain is doomed and it should be noted that the bankruptcy does not affect franchised locations.
Every day, more and more Americans buy nondairy or private company milk products. Last Tuesday, the dairy giant filed for Chapter 11 bankruptcy protection. They even had to cancel contracts with dozens of dairy farmers. However, they are not going down without a fight. They have secured $850 million in “debter-in-possession” financing. According to cnbc.com, Americans are consuming 26% less fluid milk over the last two decades. In seven of the last eight quarters, Dean Foods has reported a net loss.
We have covered this particular bankruptcy in depth in previous articles, but there are updates! A quick summary – PG&E is California’s largest utility company. Their equipment is being blamed for the wildfires of 2018 that caused over $30 billion in damages.
PG&E wanted to manage their own bankruptcy plan in conjunction with the courts. Their plan may be derailed as the judge is allowing Pacific Investment Management Co. and Elliott Management Corp. to submit their own restructuring plans. The restructuring is part of their Chapter 11 filing which took place in January 2019.
As recent as Wednesday, hundreds of thousands of Californians had their electric turned off as more wildfires are sweeping Northern and Central California.
Who Cares About Corporate Bankruptcy?
Well, that is a fair question. However, when enormous companies go through bankruptcy, restructuring, and cost cutting, thousands of people can lose their jobs. In many cases, these companies are trying to avoid that which is why bankruptcy is called “protection”.
Corporate or small business bankruptcy can affect everyone. If you are a business owner and the business is suffering financially, do not wait to seek out solutions. You may even be able to avoid bankruptcy altogether. Elias Dsouza of Dsouza and Strachan Lawgroup Group has been helping business owners understand their financial options for well over a decade. Contact Elias today for a free consultation.