Illinois business owners may be interested to learn that the rate of filed business bankruptcies is falling across the country. Illinois Chapter 11 filings, however, demonstrated the largest gain in the country in 2014, increasing by 6 percent since the end of the first quarter of 2014.
Most of the bankruptcy filings across the nation have been done by small businesses having annual revenues of less than $2.5 million. In Illinois, by contrast, the increase was primarily due to large casinos, including Harrahs, Showboat, Horseshoe and Caesars, all of which filed for Chapter 11 protection in the Northern District of Illinois.
Economists believe the decline in Chapter 11 petitions is due to a combination of factors. Lower interest rates have led businesses to borrow more, and many businesses that were financially troubled closed during the recession that began in 2007. Other business owners believe that filing for bankruptcy comes with high costs, leading them to consider other alternatives to address business debt. Chapter 11 filings are predicted to increase as a result of rising interest rates and the fact that many loans issued since 2009 are becoming due.
When a company is experiencing financial difficulties, having problems paying debts but still bringing in significant revenues, business bankruptcy may provide a good option. By restructuring the company's debt, the business may then be better able to obtain the financial relief needed so it can get back on track. Companies that have revenues that are insufficient to pay their outstanding obligations may want to seek the advice of a bankruptcy attorney regarding the consequences of filing a Chapter 11 petition. In many cases, a successful completion of the plan of reorganization can leave the business in sounder financial shape than it was before.