Bankruptcy seems to be unwelcomed, but still an alternative for the “credit heavy,” according Raven Owen, housing counselor with JCVision & Associates.
In her pre-bankruptcy work for local attorneys, she sees some small businesses opting for bankruptcy.
“It is because they’re at a point that the bankruptcy protection from the creditors looks very, very good to them,” Owen said.
Counseling shows some have overextended themselves, but some bankruptcy woes are tied to the economic shake-up that cut incomes and increased debts and expenses.
“The economy folded so quickly that so many did not see it coming because they were relying on credit to operate their business,” Owen said, making particular mention of the trucking industry.
And it just didn’t jolt consumers. Businesses in Liberty County have also found themselves in over their head.
Yellow Bluff Development, LLC filed Chapter 11 bankruptcy Jan. 6 and is still looking for a solution.
The Midway development did not meet a May 6 deadline to submit a reorganization plan and asked for a 120-day extension April 30.
Another four months will allow Yellow Bluff to continue negotiations with their creditors, according to Sam Kay, bankruptcy clerk court for the Southern District.
“It’s not uncommon for the debtor to ask for an extension to file a plan,” Kay said. “They haven’t set a hearing to extend the time, but that’s pretty routine under Chapter 11.”
In its motion for extension, Yellow Bluff said it is seeking a “preliminary loan commitment from The Heritage Bank to provide funds needed to complete certain amenities at debtor’s property and to provide operating capital.”
The loan depends on the court’s approval.
Another key to their plan is “an offer of compromise settlement regarding the bank’s claims,” with SunTrust Bank, Yellow Bluff’s primary secured creditor.
Yellow Bluff is not alone.
Dolphin Island Preservation, LLC in Midway is still in its first 120 days of negotiations after filing Chapter 11 bankruptcy March 5.
Corporation officials had a hearing with creditors April 3 to hash out its $8.5 million assets and the $7.6 million they owe.
Bankruptcy knocked on the more prominent door of TitleMax Holdings, LLC April 20, but not because the auto title lending business had financial struggles, “as is typical with most bankruptcy filings,” according to TitleMax CEO Tracy Young.
“TitleMax filed for bankruptcy protection because of its inability to refinance its existing credit facility with Merrill Lynch, which was recently acquired by Bank of America,” Young said in a press release.
“We made this difficult decision to give the company the ability to maintain business without interruption and position the company for continued growth.”
A meeting with all the creditors is set for June 1 in the bankruptcy court in Savannah.
Financial moves from such as businesses like TitleMax, with about 550 stores in eight states, may have a rippling effect.
Businesses and consumers are somewhat interconnected, according to John Wills, president of Consumer Credit Counseling Services in Savannah.
“When consumer spending is down, so is basically the business for that company,” Wills said.
“As things get tight for the consumer – they’re really having to watch their pennies…that has a direct impact on how well the businesses are doing.”