When a New Jersey corporation enters business bankruptcy proceedings, it does not mean the end of the world for the company. In fact, in many cases, business bankruptcy can represent an extremely positive new beginning. Quiznos, the world-famous fast food sandwich chain, for example, recently initiated the Chapter 11 process in the hopes of reducing its debt and coming out stronger in the end.
Quiznos does not plan on ending its business operations. In fact, its file has been referred to as a prepackaged bankruptcy plan. The company recently stated that it wants to reduce its current outstanding debt of $600 million down to $200 million. The company further stated that the bankruptcy proceedings will increase the corporation’s flexibility, improve its strength and performance and revitalize its brand.
At this time, of the restaurant chain’s 2,100 locations, only seven are corporate owned. The rest are franchisee owned, and they will not be affected by the Chapter 11 proceedings. According to some, the success of Quiznos after bankruptcy will largely depend upon whether it drops its current strategy of trying to outpace its competitor, the other famous sandwich chain — Subway.
Regardless of what happens to Quiznos in the coming years, the Chapter 11 process — if successful — will allow the corporation to settle at least $400 million in outstanding debt. By resolving this cumbersome burden, the company will be able to achieve its strategies and goals with greater ease and fluidity than if it were still being weighed down by it. Indeed, the benefits of bankruptcy for companies in New Jersey and the rest of the United States cannot be underestimated. Many great corporations have utilized bankruptcy to achieve their future success.
Source: fool.com, Quiznos Files for Bankruptcy; Can it Ever Compete With Subway?, Daniel Kline, March 17, 2014
