Long-time Wisconsin dairy company files for bankruptcy protection

April 24, 2013 (Press-News.org) Long-time Wisconsin dairy company files for bankruptcy protection

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When the expenses of a business outpace its income for too long, eventually it may have to make the hard decision to close the doors. This is what happened to a Waukesha milk bottling company, Golden Guernsey, earlier this year.

The company was established in Milwaukee over 80 years ago and is well known in the Wisconsin dairy industry. With both assets and liabilities reportedly in the $10 to $50 million ranges, the private equity firm that purchased Golden Guernsey in 2011 sought Chapter 7 bankruptcy protection early this year, leaving more than 100 employees without jobs and Wisconsin schools looking for a new source for milk for their student lunches.

Deciding to end a business

When a business struggles financially, it is important to assess all available options before making the decision to cease operations. An entity may wish to consider such options as:
-Liquidating the company assets
-Selling the business outright to a buyer
-Transferring ownership rights through a gradual sell-off of portions of the business
-Leasing the business or its assets with a lease agreement
-Restructuring its debt through bankruptcy

A sole proprietor may make this decision on his or her own, but partnerships, companies and other types of entities will generally need to have the agreement of all the co-owners. Additionally, when an entity is established, business governance documents are typically created outlining how the entity may be transferred or dissolved.

If a decision to close the business is made, it is important to follow legal requirements. Every state requires certain steps when dissolving an entity and the owners must comply with employment and labor laws. In Wisconsin, companies that have 50 or more employees must notify state officials if a shutdown will involve a mass layoff of its employees. Such notice must be given 60 days prior to closing.

Additionally, closing businesses must follow certain governmental filing requirements that can include the following:
-Filing dissolution documents
-Cancelling business credit cards, licenses, permits or registrations
-Closing accounts
-Paying businesses taxes and bills

Filing for bankruptcy

While some companies choose to file Chapter 7 bankruptcy, effectively wiping the slate clean of qualified debts, this forces them to close their doors. However, many want to continue operating the business and simply wish to restructure the business debts through a Chapter 11 bankruptcy filing.

A Chapter 11 bankruptcy allows entities to continue by creating a reorganization plan. The process is overseen by a bankruptcy court and a judge must approve the plan. If you are an owner or a co-owner of a business that is going through financial difficulties, consult an experienced business lawyer who can help you assess the options that are best for you and your company.