Florist FTD Files for Bankruptcy Protection
Founded over 100 years ago, florist FTD is probably best known for its commercials informing the public that they can ship flowers to loved ones on Mother’s Day or any other special occasion within 24 hours. FTD works by having a network of florists around the country who live near the intended recipient, thus making it possible to get flowers to a loved one in a short amount of time. However, as reported by Marketwatch, FTD has succumbed to filing Chapter 11 reorganization in an attempt to save its business.
Financial problems stemmed from FTD’s decision in 2014 to buy its rival, ProFlowers. That decision ended up costing the company millions of dollars. In fact, FTD reported over $200 million in debt and supplier bills when it filed for bankruptcy.
Why Chapter 11?
Chapter 11 is a popular bankruptcy for larger businesses that want to get a handle on their debts without liquidating. In other words, they want to try and save the business by reorganizing the debt load to something more manageable. Chapter 11 allows them to do that.
A company has also begun to line up financing to buy the company. According to USA Today, a private equity company has secured $95 million to purchase FTD. The company will continue to operate throughout its bankruptcy, so consumers can continue to order flowers, candies, and other gifts and expect them to be delivered.
Creditors also have a role to play in a Chapter 11. For example, they can block any plan to reorganize debts, though the debtor can ultimately ask a judge to approve the plan over their objections in a process called a “cramdown.”
Can FTD Be Saved?
The fact that the company is reorganizing does not mean that its business model will remain viable going forward. One reason FTD struggled even after buying a large competitor is that other competitors have entered the scene. One, Amazon, provides free shipping for Prime members and has grown very popular with consumers who buy books, cosmetics, kitchen supplies, and even food from the gigantic e-retailer. Amazon and other e-commerce sites will continue to provide a challenge to FTD, even under new ownership.
Can Your Business Be Saved?
Chapter 11 is not appropriate for every business. Business owners should take a hard look at what has caused a downturn in the company’s fortunes and decide if they are temporary or can be overcome. Not every business that struggles financially should continue to be operated. Instead, it might be more sensible to pull the plug on the business and file for Chapter 7 liquidation.
If your family or small business is struggling, we can help. Nowack & Olson has a team of Plantation family small business bankruptcy attorneys who have worked closely with many business owners over the years to successfully reorganize their debts. We can also file a liquidation if that makes more sense.
Contact us today. Business bankruptcies raise unique questions, and you need a legal advisor who understands your business. You can schedule a consultation with us by calling 888-813-4737 or sending us an online message.