THE client has been in business since 2014. It has multiple outlets, more than 15 in the Southland. Some outlets are profitable, some break even, and some lose a little money, but on net basis, the business is profitable.
When things were good, it had 30 employees. Then the pandemic came into our lives and things were never the same again for client. In 2020, the first year of the pandemic, all outlets were losing money. Stockholders put in another $300,000 of capital but that was not enough to keep the business afloat. So, when the PPP loans became available, client applied and obtained an approval for a $1M disaster loan within a few days.
The $1M went into client’s checking account. Client is a C corporation with three stockholders. The entire $1M loan proceeds went to pay salaries and wages and some rent. But even with the disaster loan, client lost $500,000 in 2020.
In 2021, the client started closing the retail outlets one by one, starting with the ones losing the most money, to cut down drastically on expenses. But even as expenses were being cut, revenues were way below pre-pandemic levels. So, 2021 was also a banner year for losses for client. In 2022, only three outlets remained, but all three were still losing money. Stockholders could not agree to put in more capital so by the end of 2022, client decided to stop operations completely.
In 2023, the stockholders decided that client should file for Chapter 7 liquidation as it looked like there was no way for revenues to get back to pre-pandemic levels. Even Bed, Bath and Beyond, which had 300 outlets nationwide decided last week to file for Chapter 7 liquidation.
The U.S. economy, as some pundits observe, is on its way to a recession, hopefully a mild one. The Feds keep increasing benchmark interest rate to tame inflation to achieve a soft landing for the economy without recession.
The unjust Russian invasion of Ukraine, now on month 15, is a hot war that seems intractable. Kudos to the brave and heroic Ukrainians who are fighting for the very soul of their country and people. This war has debilitated the entire global economy and has spiked food prices everywhere as Ukraine is the major supplier of wheat to the world. Maybe China can broker an end to this war sooner than later. Xi Jin Ping has Putin’s ear and Zelinsky is open to help from China to end the war.
If you have too much debt and need relief, please set an appointment to see me. I will analyze your case personally.
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Disclaimer: None of the foregoing is considered legal advice for anyone. There is absolutely no attorney client relationship established by reading this article.
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Lawrence Bautista Yang specializes in Bankruptcy, Business, Real Estate and Civil Litigation and has successfully represented more than five thousand clients in California. Please call Angie, Barbara or Jess at (626) 284-1142 for an appointment at 20274 Carrey Road, Walnut, CA 91789 or 1000 S. Fremont Ave., Mailstop 58, Building A-10 South Suite 10042, Alhambra, CA 91803.