Discussed in this blog on September 30, 2011, was the news that Friendly's Ice Cream was headed to bankruptcy. Indeed, the company did file for Chapter 11 bankruptcy protection on Wednesday, October 5, 2011. It emerged -- as is the goal in Chapter 11 bankruptcy -- leaner, more capitalized, and ready to do business anew this week. There were not consequences, however. Thirty-seven restaurants were closed for good on Sunday night and the former owner, Sun Capital Partners, is owed $267.7 million dollars as part of the restructuring.
"Emerging" is a term generally associated with Chapter 11 bankruptcy. But the fact is, anyone who gets a discharge emerges from bankruptcy. Eventually all cases are closed. The goal, then, is to emerge with that discharge and not emerge as a filer whose case has failed. Indeed, there are consequences if you file a case and it gets dismissed for failure to advance the case. The automatic stay, for instance, can become compromised. The automatic stay, of course, is that which prevents creditors from contacting you during the pending bankruptcy and it precludes their ability to advance collections, levy accounts, garnish your paycheck, or initiate lawsuits.
Friendly's emergence is a good thing. As a Norristown bankruptcy lawyer, I drive by a Friendly's nearly every day. There are Friendly's restaurants in Frazer, Media, and West Chester. And who does not like ice cream, say vanilla, with butterscotch or hot fudge, maybe some whipped cream, a cherry or two, nuts perhaps, sprinkles possibly...but I digress. Friendly's itself is 76 years old and an iconic American tradition. Bankruptcy often conveys the image of failure, when, in fact, it is merely an umbrella of legal protection during a period of reconstitution, reorganization, or reconstruction.
Yes, sadly, 37 stores were closed and hundreds of employees lost their jobs as a result, but evolution is the nature of business. It is safe to assume that these particular stores were not the most profitable. Not everything works out. But this is a good thing, at least for us as consumers. Choice, determined by the almighty dollar, is a powerful thing. And we invoke that choice when we decide where to spend. We determine viability and success. Sure, we can be swayed by marketing schemes and savvy advertisement campaigns, but that's part of the process, too. I, for one, never like to see locals get displaced, but I am also happy to see that Friendly's has emerged from their Chapter 11 capable of moving forward as a new, leaner, better capitalized restaurant entity.
Most consumers, of course do not need a Chapter 11. You need a Chapter 7 or a Chapter 13. Visit our website for more information about these particular topics or call a local Norristown bankruptcy attorney today. In brief, Chapter 7 is where you file, go to a 341(a) hearing, and then wait a few months for notice in the mail that the case is over. It is fast and fairly easy; you really need only list your assets and debts and protect your property through the exemptions afforded Pennsylvania residents (on Schedule C of the petition). Chapter 13 is a consumer bankruptcy, also, but will take between three to five years to end (though you do receive a discharge at the end, also); it has the advantage of allowing you to save a home, lien strip a junior or second mortgage, catch up on taxes, etc. all the while the automatic stay remains in effect to protect you from collections.
Congratulations, Friendly's. You have emerged from Chapter 11 ready to go...with a cherry on top.
