Harry & David, the popular gourmet food company, announced earlier this week that the company has filed for bankruptcy protection. Bankruptcy proceedings began this week and the company has won approval by the bankruptcy judge to continue operating the business as usual. Harry & David will also continue promoting special customer programs while the company works out its reorganization plan.
The gourmet food company’s reason to file bankruptcy may resonate with many small business owners in Florida who are struggling in today’s economy. Harry & David concluded that the recession has resulted in a decrease in consumer spending, affecting sales especially around the holidays when the company has historically made a significant amount of profit with their popular fruit and food baskets. The company also said that Internet businesses have been a strong competitor, eating away at the company’s earnings.
Small business owners in Florida may be running into similar financial problems. As consumers spend less and online shopping becomes more popular and convenient, small business owners suffer. In efforts to save a small business, many owners consider ways in which they can keep their business going, which often leads to bigger financial problems. Some may take out a second mortgage on their home in order to continue to pay employees or keep inventory in stock. However, this is often only a temporary solution.
Restructuring debt under Chapter 13 may be a better solution for some small business owners. Bankruptcy protection allows individuals in Florida to evaluate the financial future of their business and find ways to restructure debt so that owners can rebuild their business without losing it entirely. In some cases, Chapter 7 liquidation may be a better solution if the small business is in serious financial trouble.
Harry & David’s decision to file bankruptcy not only reflects the financial turmoil large companies face in today’s economy, it also reflects how small business owners may be facing similar situations that are threatening to a company’s existence.
The Wall Street Journal: “An Apple a Day Keeps the Bankruptcy Judge Happy,” Rachel Feintzeig, 29 Mar. 2011