Last week, our Miami bankruptcy law blog discussed the financial risks businesses and business owners take and how many factors can contribute to the success or failure of one’s venture.
The founder and producing director of Florida Stage, a theater company that recently announced its decision to file Chapter 7 bankruptcy, knows all too well how the economy can affect one’s business in Florida. “I was clear about the risks in the beginning,” he commented shortly after the decision was announced. “I never knew if year one would lead to year two, let alone year 22 and year 23,” he continued.
Florida Stage was a well-respected theater company that ran for 24 years before announcing its plan to file for bankruptcy protection last month. Although many in the community were shocked by the news, a former board member commented that the theater company should have addressed their financial issues years ago.
Our Miami bankruptcy blog discussed Florida Stage’s initial announcement to file bankruptcy last month, but our next two posts will focus on what led to the theater company’s financial problems, ultimately forcing the company out of business.
The theater company’s finances were severely impacted by the recession beginning in 2007. Despite the fact that ticket sales, donations and government funds declined, Florida Stage saw an increase in spending. In 2008, the company ended its fiscal year with a $268,948 deficit.
Auditors warned managers that significant budget cuts needed to be made if the company wanted to stay in business. However, Florida Stage failed to cut expenses and ended the following fiscal year with an $818,297 deficit.
We will continue to discuss what led to Florida Stage’s decision to file bankruptcy later this week.
Source
Palm Beach Daily News: “Florida Stage: Why the curtain fell, an analysis,” Jan Sjostrom, 25 June 2011