When restaurants enter the Chapter 11 bankruptcy process due to a need to reorganize debts for a more stable financial future, things can move quickly. While 120 days seems like a long time -- it's approximately four months, after all -- that's all the time you have to finalize a reorganization plan.
A common mistake many restaurant owners make is letting emotions interfere with business decisions. Franchise owners might want to hold on to locations that simply aren't performing because they are emotionally tied to the concept of owning more stores. Those who operate a family-owned dining establishment that's been part of the community for years might find it hard to make any decisions that involve a big change. Emotional ties are a good reason for working with a bankruptcy professional during a Chapter 11 process; a third-party can help you look at the facts and bottom line when you are caught up in other perspectives.
For restaurants, Chapter 11 bankruptcy doesn't have to be a death knell. When properly structured and followed through with, business bankruptcy is a reorganization step that can help the restaurant be more successful in the future. Looking at bankruptcy from this perspective helps you be more positive about the process and take steps to create a better financial foundation for the company
Another mistake some restaurant owners make regarding bankruptcy is waiting too late to file. If you are struggling to pay bills already, you might be tempted to shuffle funds and try your hand at cost-saving measures to turn the tide. Fighting that tide too long without seeking professional assistance can result in your business falling deeper into debt.
Source: QSR Magazine, "Bankruptcy Guide," accessed Sep. 02, 2016