When businesses in Nashville file for bankruptcy, most might assume that is it under Chapter 11. This is the form of bankruptcy that allows companies to create a restructuring plan that will hopefully allow them to avoid debt struggles in the future. Yet there may be times when a restructuring is not possible, and the only solution available to a company is to liquidate its assets, repay its creditors and move on. This may be the conclusion reached by a company’s management team, or in some cases, the decision might be made for them.
The latter is exactly what happened in a recent bankruptcy case in Minnesota. The operator of several skilled nursing facilities across four states was forced into an involuntary Chapter 7 bankruptcy by three of its creditors. The company reportedly has over $17.5 million in debt that is owed to several different vendors. At risk in this case was the well-being of over 1,300 residents currently living at the company’s facilities. The company apparently already realized this, as it quickly sought a settlement in the case. Both sides recognized that it no longer had the resources to care for its many patients. However, ownership and management of its facilities has already been transferred to a new organization, avoiding any interruptions that might have occurred in the delivery of care to patients.
One might have assumed that a company working in healthcare would be immune to debt struggles, as such services are seemingly always in demand. The fact that this company (and others like it) do struggle with debt may reinforce the point that it is a problem that can plague everybody. Those hoping to deal with mounting debt through bankruptcy may first want to consult with an attorney.