A hobby product distributor, Hobbico, recently claimed that it has been struggling financially. As a result, it decided to file for Chapter 11 bankruptcy protection on a recent Wednesday. The move may lead to more than 330 layoffs at its facility in another state beginning in the month of April. However, filing for bankruptcy can be a helpful way for companies in Massachusetts and elsewhere to deal effectively with their financial issues.
In Hobbico’s case, officials said they intend to sell the business. However, the company will remain in operation during the bankruptcy process. The distributor said it took on an exorbitant amount of debt and, unfortunately, has been unable to restructure successfully. On top of that, the company’s industry has become increasingly competitive.
According to the distributor’s bankruptcy filing, the company has between 200 and 999 creditors. In addition, its asset total is between $10 million and $50 million, whereas its liabilities range from $100 million to $500 million. The company said that, although it tried over the years to restore itself to financial health, it could not address its many challenges and thus remained unstable. The bankruptcy filing may enable the company to attract brand-new capital investment.
Sometimes, companies in Massachusetts find themselves swimming in debt for reasons beyond their control, such as changing market demands. Unfortunately, this can take a financial and emotional toll on those operating the companies. However, an attorney can walk a struggling business owner through the Chapter 11 bankruptcy process so that he or she can finally attain much-needed financial relief. In many cases, companies that complete this type of bankruptcy process can remain in operation long term as a result.
Source: news-gazette.com, “Hobbico files for bankruptcy; layoffs next?“, Ben Zigterman, Jan. 10, 2018