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Los Angeles Corporate & Securities Law Blog

A popular CA based clothing retailer files for bankruptcy

Among the recent string of retail-based company bankruptcies is a company who was very popular with 20-somethings once upon a time. California based Wet Seal has released a statement that it has filed for Chapter 11 bankruptcy. For those following the company, this has not come as a shock because the company's stock price has lost 98 percent if its value in the past year.

After careful consideration, the board of directors for the publicly traded company announced its plans for Chapter 11. Despite the complex business matters, it seems the company is taking the proper precautions to ensure the bankruptcy process is as smooth as possible. The bankruptcy appeared imminent in early January when a representative for Wet Seal announced that it would be closing two-thirds of its store fronts in 2015.

What is the SEC and what does it do?

A recent post on this blog discussed how emerging businesses want to pay careful attention to their legal affairs in order to avoid facing a substantial fine or other penalty for the federal Securities and Exchange Commission (SEC). While some Los Angeles, California, residents probably have a good idea of what the SEC is and what the federal agency does, others, including business owners, may honestly want more information about the organization.

Congress created the SEC during the era of the Great Depression. Many people lost all of their savings in the stock market when the market crashed in 1929. Some of the losses could have been prevented by requiring those who were offering stocks and bonds to disclose truthfully the full extent of a person's potential risk and return. As it stood, many people during that time wound up with stocks and other investments that had no value.

Understanding how Chapter 11 bankruptcy works

It is often quite difficult to build and grow a successful and profitable business. There are many things along the way that can derail an entrepreneur's plans or threaten the longevity or sustainability of the business. Many businesses take on a significant amount of debt initially in order to get started. However, if the market changes or the business suffers extensive losses, it may find itself in a position where it is unable to pay its existing debts and financial obligations. This is where Chapter 11 bankruptcy, also known as business reorganization, can come in.

In order to begin a Chapter 11 bankruptcy, a bankruptcy petition must be filed with the bankruptcy court where the business is domiciled. There are two different classifications of bankruptcy petitions: voluntary and involuntary. If a petition for bankruptcy is voluntary, it means that the debtor, or the business, filed the petition. In contrast, an involuntary petition is one that can be filed by certain creditors of the business.

Building a business without running afoul of SEC regulations

Businesses in Southern California must constantly adapt to change. Customers, markets and work dynamics are always changing, and if the business can't adapt to these changes, it could be in big trouble. Added on top of this is the constant change of state and federal securities law. If publicly traded businesses don't keep up with the laws and make sure they are complying with regulations, they could find themselves facing steep fines or worse.

After the economic collapse of 2008, federal regulators came under a lot of criticism for not doing more to prevent the catastrophe. While the economy has, thankfully, recovered quite a bit since then, there is still a good deal of political pressure to make sure investors, traders, bankers and other businesses are not risking another crash.

Healthcare company continues pattern of mergers and acquisitions

Growing and maintaining a successful business can be tough. Regardless of whether it is a new start-up or an established company, the demands on satisfying customers, responding to market changes, and dealing with the competition never let up. One of the ways that a company can continue its growth and increase its profit potential is through mergers and acquisitions, as demonstrated recently by an expanding healthcare company.

U.S. HealthWorks continues to increase its market presence and availability for consumers by recently acquiring three additional medical centers in Orange County, California. The three centers recently acquired-two locations of Tustin Irvine Medical Group and an East Edinger Industrial Urgent Care-all provide a range of medical services, including preventative services, exams related to employment, rehabilitative care, diagnosis and treatment. These acquisitions follow the earlier acquisitions by U.S. HealthWorks of California Occupational Clinic of Los Angeles and IndustriCare. With the three newest acquisitions, U.S. HealthWorks now boasts 73 locations in California alone, not to mention numerous others across the country.

A closer look at how Chapter 11 bankruptcy for businesses works

As was recently discussed in this blog, at times, and in some situations and circumstances, an important option for a business struggling with debts to consider may be the Chapter 11 reorganization bankruptcy process. To determine if Chapter 11 bankruptcy is the best option for a struggling business, it is important for any party considering filing for Chapter 11 bankruptcy to understand the process and what it provides.

Once a party has filed a petition for Chapter 11 bankruptcy, which begins the bankruptcy process, the filing party is required to file with the court a list of liabilities and assets; a schedule of income and expenditures; a statement of financial affairs; and a list of unexpired leases and executory contracts. The filing party is also required to submit a reorganization plan to the court.

Nutrition company files for Chapter 11 protection

People who go into business in Los Angeles, across the country and all over the world are investing their time and money into an endeavor and trying to make it into a success. Those who have a deep knowledge of their work and enjoy what they are doing might have boundless enthusiasm, but in some cases a lack of knowledge in business matters that can mean their business will run into trouble. That trouble often results in the need to file for Chapter 11 to deal with creditors who want to recover what they are owed. Knowing how to move forward with a business bankruptcy is an important aspect to save the business or to move on and clear one's debts.

A former competitive bodybuilder who gained worldwide fame for his work in the gym and success on the contest stage began a supplement business bearing his name. Unfortunately, the cash flow failed to meet his debts and he is been forced to file for Chapter 11 bankruptcy. The company is $16 million in debt in spite of an expected $45 million in sales in 2014. The company has declined from its highest level of $78 million in sales in 2011. Other supplement companies are interested in taking this company on with one interested in keeping the founding bodybuilder on staff. The company had been investigated by the FDA for some claims of its products.

Business litigation may be the answer

As businesses work together to increase efficiency and production, it is no surprise that disputes arise. Most often these disputes come about because one business did not follow through with a task or promise that was laid out in an agreement. Other times, there is a question about an agreement itself and who is promising what. When these situations arise, it is sometimes best to proceed with business litigation.

Litigating a business matter in a court of law may seem intimidating to some individuals. However, a court of law is sometimes necessary to hold a business to its promises and ensure that a high standard is maintained in the business world. When efforts of settlement and discussions have failed, business litigation is one way to handle any dispute at hand.

Mergers exist in many forms

Businesses may come together in a merger for many reasons, but a main goal of a company merger is to increase profits and efficiency. As businesses contemplate a possible merger in the future, they may want to keep in mind that many different types of mergers exist, and it is important to find the right one to fit their needs.

A conglomerate merger occurs between two unrelated business activities. These mergers can occur between two companies that have nothing in common or between two businesses that are looking to extend their area of business. Horizontal mergers, on the other hand, occur between two businesses operating in the same industry and are looking at extending their market share. Vertical mergers are between two companies that exist together in supplying products to a certain supplier.