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Sam Seltzer's Steakhouses filing for bankruptcy
TAMPA (Bay News 9) -- The economic slowdown claimed another victim this week.
Sam Seltzer's Steakhouses of America is filing for Chapter 11 bankruptcy.
According to Bay News 9's partner paper, the St. Petersburg Times, the Tampa-based business is blaming their financial troubles on high fuel prices and too much debt.
The company's CEO said the "core group" of restaurants will stay open. They've obtained a $1 million line of credit to support the company while it undergoes reorganization.
More about Chapter 11 bankruptcy
Chapter 11 bankruptcy is a form of bankruptcy reorganization most often utilized by large businesses seeking to restructure their debt.
The debtor usually remains in possession of its assets, and operates the business under the supervision of the court and for the benefit of creditors. If the debtor's management is ineffective, a trustee may be appointed.
A creditors committee is usually appointed by the U.S.Trustee from among the 20 largest, unsecured creditors who are not insiders. The committee represents all of the creditors in providing oversight for the debtor's operations and a body with whom the debtor can negotiate an acceptable plan of reorganization.
A Chapter 11 plan is confirmed only upon the affirmative votes of the creditors, who are divided by the plan into classes based on the characteristics of their claims, and whose votes are a function of the amount of their claim against the debtor.
If the debtor can't get the votes to confirm a plan, the debtor can attempt to "cram down" a plan on creditors and get the plan confirmed despite creditor opposition, by meeting certain statutory tests.
Chapter 11 is probably the most flexible of all the chapters, and as such, it is the hardest to generalize about. Its flexibility makes it generally more expensive to the debtor. The rate of successful Chapter 11 reorganizations is low, sometimes estimated at 10 percent or less.
Information courtesy of the Moran Law Group
More information available from the U.S. Federal Courts Web site
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