Sunny, star-studded California is an iconic piece of the American dream, a place where entrepreneurs come to transform ideas into realities. While some of the world’s most successful businesses call Hollywood and Silicon Valley home, other companies — including a few familiar brands — have been challenged by chronic financial difficulties that led to filing for bankruptcy. Read on to learn about four of the biggest California companies to declare Chapter 11, ranked by our Roseville bankruptcy lawyers.
4 of the Biggest California Businesses to Declare Chapter 11 Bankruptcy
Though occasionally used by individuals, Chapter 11 bankruptcy is almost always utilized by businesses. Large corporations are more likely to use Chapter 11 than smaller, family-owned businesses, simply due to the time and complexity involved in Chapter 11 cases. However, every business owner is strongly encouraged to compare all of their filing options with a Roseville Chapter 11 attorney before making a decision about which chapter to utilize. The “best” option for each business will ultimately depend on:
- How much debt the business owes
- How the business is structured
- What assets and resources are available to the business
- Why the business is filing for bankruptcy
The following companies determined that Chapter 11 was the right filing option. It could be the best option for your business as well. We encourage you to contact our small business bankruptcy attorneys with any questions you may have, no matter how minor, about how bankruptcy could work to your advantage.
#4: American Apparel
Founded in Montreal in 1989, clothing retailer American Apparel later set up headquarters in Los Angeles. With edgy cuts and bold colors nodding to the styles of the eighties, the brand initially achieved popularity among Millennials and young adults. But in 2015, after six years without making a profit, the company filed for Chapter 11 in the United States Bankruptcy Court for the Central District of California. Unfortunately, sales fell by 33% after the initial bankruptcy, worsening the company’s financial problems. After filing for bankruptcy once more in November 2016 — this time in a Delaware bankruptcy court, with debts and assets listed in the $100 million to $500 million range — American Apparel’s assets were purchased by Gildan Activewear for a figure reported between $66 and $88 million.
In a story similar to American Apparel’s, retail company BCBGMaxAzria was also founded in 1989, also became a fashion fixture in the Los Angeles area, and also filed for Chapter 11 bankruptcy, even around the same time as American Apparel — February 2017. The clothing company’s bankruptcy documents were filed in the U.S. Bankruptcy Court for the Southern District of New York. The company was reported to have $485 million in secured debt, meaning debt secured by collateral. Chapter 11 bankruptcy can enable businesses to reduce their operating costs by allowing them to pay the value of the collateral — for example, the value of a company vehicle or piece of equipment — instead of the amount which is actually owed.
Headquartered in Huntington Beach, Quiksilver carved out a niche manufacturing surfwear, surfboards, and other gear designed for surfers. However, the company filed for bankruptcy in 2015, with assets of $337 million and debts of $826 million, after a 2013 financial plan failed to repair the damage from a six-year streak without profits. The surfwear company’s Chapter 11 plan was primarily managed by Oaktree Capital Management, which is now the majority shareholder.
While the other names on our list may sound more familiar to you, Avaya’s bankruptcy was far larger in scope, restructuring approximately $6.3 billion in debt. The Santa Clara-based telecommunications company filed for Chapter 11 bankruptcy in January 2017, but its financial difficulties reached back to 2007, a decade earlier, when Avaya agreed to an acquisition by Silver Lake Partners and TPG Capital. Avaya received a loan of $725 million from an affiliate of Citigroup to continue business operations during the Chapter 11 reorganization plan.
Sacramento Chapter 11 Bankruptcy Attorneys for Business Owners
Though not always the appropriate solution, Chapter 11 has helped many businesses emerge from debt to become more profitable and successful. In other situations, it makes more sense to file for Chapter 7, which is another bankruptcy option for S corporations, C corporations, and limited liability companies. If you are a sole proprietor who owns a small business, Chapter 13 bankruptcy could also be a potential filing option. The bottom line is that bankruptcy can be a viable strategy for strengthening your business, mitigating your losses, and achieving other professional goals.
To discuss your business bankruptcy options with an experienced California Chapter 7 attorney or Chapter 13 lawyer, contact the The Bankruptcy Group at (800) 920-5351 for a free legal consultation. We assist corporations, LLCs, partnerships, and sole proprietors with business bankruptcy cases in the Sacramento area, including Folsom and Roseville.