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Store proposes additional closures in plan for reorganization

Companies in Maryland and across the country often open stores in various locations in an attempt to maximize sales. However, this can also be risky, especially since it is often difficult to predict how well a store will do in a new location. If a company begins to experience prolonged periods of financial struggle after expanding, it could find itself in need of financial reorganization, and thus consider filing for Chapter 11 bankruptcy.

A popular shoe store has recently filed for Chapter 11 bankruptcy, and has requested permission to close over 400 locations in the process. It had already closed as many stores prior to filing, and is apparently continuing to restructure business operations in an attempt to remain operational. The recent request for closure of certain locations reportedly stems from an inability to negotiate a lesser payment for rent with landlords.

Countless businesses have experienced similar challenges at some point, many of which have chosen to undergo bankruptcy. Under Chapter 11 bankruptcy, a business is allowed to remain operational while forming a reasonable plan to repay debts over a given period. This type of plan can also provide protection from creditors, provided the company adheres to the terms of the agreement by making the proposed payments.

Financial struggles do not have to indicate the end of the road for a business, and over the years many have regained success after bankruptcy. However, it can be a complex process, and owners in Maryland often choose to seek guidance and assistance throughout this difficult period. An attorney can address a client's financial situation, provide advice on available options for reorganization and assist in pursuing the most favorable outcome achievable concerning the future of the business.

Source: USA Today, "Payless ShoeSource could close another 400 stores in bankruptcy", Nathan Bomey, May 31, 2017

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