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Illinois Restaurant Chain Files for Bankruptcy

Posted on in Bankruptcy Attorney

Olga's Kitchen, a restaurant chain known for its Mediterranean wrap sandwiches has filed for Chapter 11 bankruptcy. Olga's has closed eight locations over the past year due to underperformance. The closed restaurants were inside regional malls as opposed to the casual dining design that other Olga's Kitchen locations have followed.

Olga's Kitchen officials reassure customers that twenty-eight of the restaurants will remain open through the bankruptcy process. All of the restaurants are located in Michigan, with the exception of one restaurant in Alton, Illinois.

This is the third time that Olga's has restructured its financial situation. Company officials decided to file for bankruptcy protection due to problems with profitability. Chapter 11 bankruptcy will give Olga's Kitchen the opportunity to restructure its debt or potentially prepare the business to be sold. The bankruptcy total is approximately $16 million, however, the company would like to retain current ownership and improve its financial situation by identifying potential investors.

What is Chapter 11 Bankruptcy?

Chapter 11 bankruptcy is known as the reorganization chapter of the Bankruptcy Code. Through filing Chapter 11 bankruptcy, a debtor is able to reorganize his or her financial obligations while retaining assets. Both individuals and businesses, large and small alike, are able to file Chapter 11 bankruptcy.

Benefits of Chapter 11 Bankruptcy

Chapter 11 bankruptcy provides protection to debtors through:

*Giving debtors automatic stay from creditor enforcement
*Allowing debtors to remain in control of their estate
*Allowing debtors to propose a new plan for profitability following bankruptcy. Such a plan may include ideas such as lowering costs of expenses and developing new sources of revenue or income.

Although debtors are able to retain ownership of their estate, a trustee may be appointed for cause. Such reasons include:

*Fraud
*Dishonesty
*Incompetence
*Gross mismanagement

How to File for Chapter 11 Bankruptcy

If an individual or business decides to file for Chapter 11 bankruptcy, a petition must first be filed with the bankruptcy court serving the area of the debtor's domicile or residence. For an individual, a domicile is where one resides. For a business, a domicile is the place of incorporation and/or its principal place of business.

The debtor is then granted the exclusive right to file a plan of reorganization for 120 days and to solicit a plan of reorganization for 180 days. The debtor, under certain circumstances, may seek an extension of these exclusive time periods. If the exclusive time period terminates, any creditor or party of interest can file a reorganization plan for the debtor.

Are You Considering Filing for Chapter 11 Bankruptcy?

If you or your business is contemplating Chapter 11 bankruptcy, it is important that you seek legal assistance. Our team at Newland & Newland, LLP consists of highly skilled attorneys that possess the expertise needed to assess your financial situation. Contact us today to schedule a free phone consultation to discuss your legal options before you follow through on your decision to file for bankruptcy.

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