Often, businesses filing for bankruptcy protection do so in order to help the company stay in operation. The financial crisis of the past few years in California and across our country has hit different industries in different ways. Chain restaurants, for example, have had to cope with families eating out less often as well as rising costs of ingredients and other materials. Faced with the need to reorganize or shut their doors forever, some businesses have decided a bankruptcy filing just might be the best way to keep their business. Those are not easy decisions, but a well thought-out and carefully executed plan to create debt solutions is sometimes necessary to stay in the ballgame.

In June, popular restaurant chain Marie Callender's filed for bankruptcy protection. Restaurant executives wanted to stay in business and needed to obtain temporary debt relief so they could help the company regain a more solid financial footing. As a result of the planned reorganization in bankruptcy court, the parent company closed 31 of its U.S. restaurants. Thirteen of those restaurants were in California. As the company continued to work through its financial issues with a bankruptcy trustee, it was announced on July 21 that four more restaurants were to close.

The company says employees were notified more than a month ago and have been encouraged to apply for jobs at other Marie Callender's locations. Part of formal reorganization requires making tough decisions to convince creditors and the bankruptcy trustee that the business plan will be successful. The restaurant says it has been reviewing all of its information to identify underperforming locations, which is what led to the recent closures.

One corollary problem of a restaurant chain in bankruptcy that has closed some locations is that other locations remaining open have to fight against a public perception the entire chain may be failing. That is not necessarily true, as there are many businesses that have reemerged from bankruptcy protection stronger for having created viable debt solutions. Many successful businesses have experienced significant financial difficulty recently. The laws governing bankruptcy protection are complicated and proceedings can be confusing when the business has multiple locations and many creditors. An attorney experienced in finding debt solutions and business and commercial bankruptcy protection may offer some comfort and understanding to an entity looking to regain a healthy share of the marketplace.

Source: The Orange County Register, "Marie Callender's closes O.C. restaurant," Nancy Luna, July 25, 2011.