The COVID-19 pandemic hit the food industry particularly hard. While government programs soften the impact, many businesses faced devastating revenue drops while expenses like rent and bank debt continued to mount. Recovering from COVID-19 may be just as difficult for businesses as it is for individuals. While some businesses may find landlords, banks and other creditors willing to work with them, others are not so fortunate. For these businesses, it may be necessary to consider available options for reorganizing under federal bankruptcy protection.
Traditionally there were two bankruptcy options for businesses. Under Chapter 7, the debtor business liquidates all of their assets, which are then distributed among its creditors, and goes out of business. This makes Chapter 7 an unattractive option for many small business owners, who may choose to liquidate without the benefit of bankruptcy petition.