Who can pass up the opportunity to purchase pet apparel with kicky phrases like, “Will Bark For Bacon,” ceramic pet drinking fountains, a remote-controlled, talking dog collar, or the Dog Dung Vacuum with its all-too-obvious function? Unfortunately for SkyMall, the answer is just about everyone.
“After 25 years selling quirky products like a Darth Vader toaster or a paper towel holder with USB ports, SkyMall LLC is seeking a court supervised sale of its assets,” according to a Jan. 23 article in The Wall Street Journal. Several leading airlines, including Delta Airlines and Southwest Airlines, announced that they would not be continuing their distribution of the popular in-flight magazine, and, shortly after, the company filed for Chapter 11 bankruptcy.
What is Chapter 11 bankruptcy? Chapter 11 enables any business, such as SkyMall, to restructure or reorganize its debts. In many cases, the business is able to remain in operation while they do it. It was an option chosen by 8,980 companies in 2013. Chapter 11 bankruptcy can save an ailing company, or it can, as in SkyMall’s case, give the owner, leading investors, and creditors the opportunity to sell. According to The Phoenix Business Journal, SkyMall sold for just $1.9 million. The nation famous company sold to CandA Marketing Inc., whose vice president, Chaim Pikarski, “hopes to turn around the catalog company.”
Of course, business-related struggles or even the end of a business doesn’t always signal familiarity with Chapter 11 bankruptcy and taxes or Chapter 11 bankruptcy help. There are several other options available for businesses filing a claim, including Chapter 7 bankruptcy and Chapter 13 bankruptcy. Chapter 7 bankruptcy, an option preferred by 728,833 companies in 2013, almost always entails liquidation. Chapter 7 is the best option for companies who do not intend to restructure and move on; rather, it is an option (often the best and most profitable one) for businesses who do not see an ongoing future for their company. Rarely, Chapter 13 — like Chapter 11 — can be used as an option to restructure debt, but only when a single person owns 100% of the company.