RadioShack Receives Large Bankruptcy Loan Offer

 Posted on January 18, 2015 in Chapter 7

For the last several months, news stories across the nation have profiled RadioShack’s financial troubles. The electronics retailer has struggled to remain relevant and compete with chains like BestBuy, and over the last few years, RadioShack has reported significant losses.

Recent news has suggested that despite RadioShack's insistence that it does not intend to file for bankruptcy, the company might have to make some drastic financial choices in the coming year. How does a business understand when it is appropriate to file for bankruptcy? Much of it depends on understanding industry trends and knowing how different forms of bankruptcy affect a business.

For businesses considering bankruptcy, discussing the financial state of the company with a bankruptcy attorney may be helpful. Depending on the options available, bankruptcy can be either a positive or negative choice.

Is RadioShack in Trouble?

There is no doubt that RadioShack is struggling to compete with larger retailers. Even small stores for cellphone companies are taking revenue from RadioShack. According to The Wall Street Journal, Salus Capital Partners has offered a $500 million bankruptcy loan to the electronics supply chain. With continuous losses over the last few years, accepting this loan might be a smart move.

Bankruptcy for Smaller Businesses

While corporations like RadioShack will likely choose to file chapter 11 bankruptcy, most small businesses will end up filing either chapter 7 or 13 bankruptcy. The decision depends on a number of different factors including the company's intentions after filing.

Chapter 7 offers several advantages for both sole proprietorships and partnerships. Since chapter 7 includes a very direct form of clearing debts, it is popular among businesses that want to liquidate and close down. While there are some ways that an owner can retain possession of assets and remain in business, such aspirations are more suitable for chapter 13.

Chapter 13 bankruptcy is not available to partnerships and corporations. The owner of the company will hang on to any vital business assets while restructuring debt through a payment plan. It is important to keep in mind that the business as an entity is not filing for chapter 13; rather, the owner is filing.

Bankruptcy Lawyer in San Antonio Texas

If you are a business owner considering bankruptcy, the guidance of an experienced San Antonio bankruptcy attorney may prove invaluable. Contact the Law Offices of Chance M. McGhee at 210-342-3400 for a free initial consultation.