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Having survived the Great Recession, US companies continue to struggle

The so-called Great Recession had an adverse impact on millions of Americans. As banks failed and the stock market plummeted, U.S. companies of all sizes struggled to remain profitable. Many were forced to reduce their workforces and accrue debt. Today, economists point to continued and positive signs of economic recovery and progress. However, many U.S. businesses that survived the past six years are still struggling and dealing with massive amounts of debt.

Falling revenue and mounting debt have created an environment in which the very survival of some businesses may be in danger. Faced with the possibility of losing everything, business owners in this situation would be wise to consider filing for Chapter 11 bankruptcy protection.

Chapter 11 bankruptcy is readily used by businesses, big and small, to provide protection against creditors. Under the terms of Chapter 11, a business is afforded protection from creditors and time to devise a plan to balance income and expenses and ultimately regain profitability. Through a restructuring plan, a business is able to find ways to reduce financial obligations and modify payment terms while still continuing to operate.

Brookstone Inc. is among U.S. companies that have recently filed for Chapter 11 protection after struggling for years to regain market share and profitability. Located throughout the U.S. in shopping malls and airports, the retail company employs thousands and operates a total of 242 stores. The recent economic depression, coupled with increased competition from online retailers such as Amazon, contributed to Brookstone's financial problems.

The company and key stakeholders have agreed to a $146.3 million sale to Spencer Spirit Holdings Inc. a successful retailer that sells novelty gifts and Halloween goods; Spencer Spirit Holdings operates some 1,646 permanent and seasonal retail locations throughout the U.S. and Canada. Speaking about the expected sale, Brookstone's CEO commented that the deal will allow Brookstone to continue to operate under its own brand with its current employees. Additionally, the sale and restructuring plan will provide the capital necessary to allow the company to focus on evolving to meet the growing and changing needs of consumers.

Source: Forbes, "Brookstone Files Ch. 11, Seeking $147M Sale To Spencer's," John Bringardner, April 3, 2014

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