Sometimes Long Island businesses just need a break so they can stop and recharge their batteries. Chapter 11 business bankruptcy is a way of doing just that.
Recently, the electric car maker Coda announced that it had filed for Chapter 11 protection and would be reorganizing itself as a maker of electric batteries. The company was founded four years ago amid a boom in investment for the electric car market and rolled out its first cars last year. However, sales did not meet expectations.
commit to the new technology. Fisker Automotive announced recently that it had laid off employees. A third electric car maker, Tesla, has sold many of its high-priced, high-performance cars but has reportedly not yet made a profit.
Large car companies such as General Motors and Nissan have invested millions of dollars in electric car technology. By concentrating on its battery business, Coda may be able to keep a foot in the electric car business. Company spokespeople also said they planned to market their battery technology to industries other than automobiles.
Filing for Chapter 11 does not necessarily mean the end of the road for a business. Other forms of business bankruptcy are designed for liquidating the company’s assets, but Chapter 11 is generally a way of reorganizing debt. It discharges some debt and puts creditors at bay while the company implements a new plan to return to profitability.
Long Island residents may associate Chapter 11 only with large corporations or car manufacturers, but it is available to small businesses as well. Business owners and managers who are stuck with debt should get help investigating Chapter 11 as a way to get their companies rolling again.
Source: New York Times, “Electric Car Maker Files for Bankruptcy Protection,” May 1, 2013