Chapter 11 Bankruptcy Saves Pennsylvania Business
When the Marathon Grill restaurant at 1818 Market Street in Philadelphia, Pennsylvania fell behind on rent because of the 2008 recession, they were able to continue operations through a debt settlement agreement with their landlord. But when ownership changed, the new landlord failed to honor the agreement and threatened to take possession of the leased premises, putting the restaurant in peril. Only through Chapter 11 bankruptcy was the Marathon Grill able to stay in business.
- According to Philly.com, the restaurant was founded by a family in 1984 and began as a hamburger joint with only 10 seats. Now it is the largest restaurant in a chain, but, as separate entities, the other two restaurants are unaffected. According to the company that owns the restaurant, they have secured obligations of approximately $2 million and unsecured debts of $450,000.
- Initially, the debt settlement agreement provided for a stipulated rent paid each month and, in September of 2012, the landlord waived 53 percent of back rent. When the new landlord failed to follow this agreement, the company filed for Chapter 11 bankruptcy. This kind of bankruptcy allows businesses to continue operations by developing a plan of reorganization that allows the business to pay creditors over time. Chapter 11 filing also provides an automatic stay, which suspends all judgments, collections, foreclosures and repossessions of property for a period of time.
If your Pennsylvania business is facing collection actions, foreclosure or repossession, seasoned commercial bankruptcy lawyers can guide you through your options to determine whether Chapter 11 business reorganization, Chapter 7 liquidation or individual bankruptcy is right for you.