Tough economic times can hit everyone hard, from entry-level employees to the owners of high-profile businesses. When things go awry for businesses, they may need to reorganize by filing for Chapter 11 bankruptcy. A fashion and gift retailer, Hilo Hattie, recently took that step for a second time.
Hilo Hattie first filed for Chapter 11 in 2008. It emerged a year later with new ownership. With the current petition, filed at the Honolulu offices of the U.S. Bankruptcy Court, they revealed a tremendous amount of debt. It totals more than $10 million distributed across over 20 creditors.
The company's executive vice president addressed the situation in a statement to the press. He said that the company is reworking all aspects of their business plan to the best of their ability. By doing so, they hope to adapt to the changing dynamics of retail in their area. He said that the company got closer to profitability due to previous steps taken, but acknowledged that challenges remain.
The $10 million debt that Hilo Hattie has includes $2.76 million worth of unsecured loans to the parent company's current owner and a related debt to the owner's other company of $4.1 million. They also owe rent amounts of $1.2 million, $525,320 and $124,223. Other figures in the filing include $2.2 million in inventory assets and a leasehold valued at $4 million.
The company faces multiple liens, including one from the state for around $130,000 in taxes and one from a bank on the company's receivables, inventory and personal property assets for around $850,000.
Other company's can learn from this one's mistakes. If it emerges from this instance of Chapter 11 successfully, that will be informative as well. With the economy still ailing, Chapter 11 filings will still be petitioned for in every state.
Source: Pacific Business News, "?Hilo Hattie files for Ch. 11 bankruptcy a second time, owes more than $10M" Lorin Eleni Gill, Feb. 22, 2015
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