Florida’s commercial real estate market has taken a hard hit in the current economy. As more consumers struggle to manage their debt and make their payments, individuals are cutting back on other expenses. Businesses are struggling as a result of consumers taking on more conservative spending habits. Revenues are dropping, and many businesses are finding it difficult to keep their operation running. In some cases, businesses have decided that bankruptcy is the best solution to finding solid ground in today’s economy.
As Florida continues to report a high volume of bankruptcy filings and foreclosures in the country, Nevada has also been reporting some of the highest numbers. Homeowners and businesses are struggling alike in the Las Vegas area. Three businesses have already filed for bankruptcy in Nevada this month. Although many businesses file for Chapter 11, which allows a business to reorganize debt and continue to function while paying off debt, some business are choosing to file under Chapter 7.
One of the Nevada-based companies filing for bankruptcy did choose to file under Chapter 7. Chapter 7 liquidates a debtor’s assets and distributes the funds to creditors in order to have the debt discharged. Vegas Tomatoes Inc. filed for Chapter 7 on Jan. 12 with the U.S. Bankruptcy Court in Nevada. The business owns a restaurant and club in the Las Vegas area.
According to the bankruptcy filing, the restaurant listed its assets at $5,000 and its liabilities at $1.3 million. The company’s loans are secured by furniture, fixtures and equipment. In June 2010, Vegas Tomatoes was sued by Newtek Small Business Finance Inc., the company the restaurant owed millions to in loans. Newtek claimed that Vegas Tomatoes was delinquent on over $634,000 in loan payments and that the collateral securing the loan would be repossessed. However, attorneys for the restaurant said that there was a dispute about the loan.
The restaurant will continue to operate until any further comments are made about how the bankruptcy will affect the business. Individual consumers are not the only ones affected by today’s economy. Many businesses are faced with financial struggles and may need to seek bankruptcy protection as well.
Las Vegas Sun: “Business bankruptcy filings continue to pile up in valley,” Steve Green, 19 Jan. 2011