On August 10, 2015, media company Columbia House filed for Chapter 11 bankruptcy relief in a Manhattan court. Columbia House was famous for offering records, cassette tapes, and videos through a subscription service by mail. Their popularity was at its highest in the 1990s, and in 1996 the company had profits of $1.4 billion. You could almost say they were the original Netflix. However, due to the rise in popularity of media distribution services like Netflix, Apple, and Spotify, Columbia House began to lose profits as a result of overcrowding in the marketplace. As a result, Columbia House is seeking to rebuild and repurpose itself through the bankruptcy process.
A Chapter 11 bankruptcy is a kind of “reorganization.” Through the Chapter 11 process, Columbia House will be able to sell unprofitable assets, pay off creditors, and restructure the company in hopes of successfully continuing to do business. Bankruptcy is not intended to be the end of a business. Instead, the bankruptcy provides temporary relief from Columbia’s creditors and lets them follow through with a plan to make the company profitable once more.
Personal bankruptcy cases work in much the same way. When an individual files a Chapter 13 or Chapter 7 case, it is an opportunity for that person to reorganize their home finances and get some relief from their creditors. When the bankruptcy case ends, the individual will be free of all (or at least a large portion) of their debts and be able to move forward and rebuild credit.
At our Bond and Botes affiliated offices, we specialize in helping people find relief in bankruptcy. Each of our offices offers free initial consultations. If you or someone you know is having financial problems, please don’t hesitate to contact us and set up an appointment with our attorneys. We’ll be happy to sit down with you and explain how filing bankruptcy could help you reorganize your financial situation.