The restaurant industry seems like a business sector with a certain level of stability. However, not every franchise, chain or business collective does well all the time. In North Carolina, K&W Cafeterias announced it would file for bankruptcy in September. The news arrives right after the enterprise closed several restaurants.
The company filed for Chapter 11 bankruptcy. Per filings, the company claims debts of more than $22 million. K&W owes about 100 creditors. Generating the revenue to pay off the debts seems dubious. The company likely sees more debts piling up, which probably contributed to the unavoidable decision to file for bankruptcy.
Some might not be familiar with Chapter 11 bankruptcy and how it differs from other bankruptcy categories. As a reorganization form of bankruptcy, Chapter 11 makes it possible for companies to restructure debt.
The 100 creditors who K&W Cafeterias owe debts may receive payments, as directed by the bankruptcy courts. Although K&W closed down several restaurants, the company might remain in business if restructuring works out well. Perhaps the company could reopen closed places in the future.
Unfortunately, business bankruptcies may spike dramatically throughout 2020 and into 2021. External factors hit the economy hard. In particular, the restaurant sector suffered significant hits.
The Chapter 11 filing by K&W Cafeterias could hit the local North Carolina economy. Restaurant closures contribute to unemployment. That said, if bankruptcy works out to everyone’s favor, the impact might not be as dramatic.
K&W owes significant money to a food supplier, and this could have a ripple effect on that business’s financial stability. The restaurant is also indebted for hundreds of thousands in state and local taxes.
An attorney could assist with a company’s bankruptcy filing. Both small- and large-sized businesses might benefit from legal representation in such matters.