“Within 24 hours, Rhythm & Hues Studio went from accepting a BAFTA award for its arresting visual-effects work on ‘Life of Pi’ to filing for Chapter 11 protection,” reported the Chicago Tribune.
While the reporter calls it “a shocking turn of events for a company that is up for two Oscars”, as a longtime attorney for bankruptcy, the story is not shocking to me. In recent years I have seen a large annual increase in the number of small business bankruptcy cases filed in our state. I chose the Rhythm & Hues story to help bust the long-standing bankruptcy myth that bankruptcy is for people who mismanage their funds and their businesses.
After more than 26 years as a debt consolidation lawyer practicing Indiana bankruptcy law, I can tell you that most small business owners DO know how to manage their finances and they are dedicated entrepreneurs who give their “all” to running their businesses. Then, “life happens”, as one of my Columbus bankruptcy lawyer colleagues puts it, and circumstances beyond their control get the better of them. In the five Zuckerberg bankruptcy law offices , we see this all the time. Rhythm & Hues thought they had a deal for financing while they waited to be purchased by Prime Focus. The deal fell through. The company tried every measure to survive – it opened up branches in Canada so as to qualify for government subsidies. It moved into India and Malaysia to lower labor costs. As every good bankruptcy attorney knows, many small business owners are hit by changes in their industry, changes in the law, changes in taxes, changes in the fate of key suppliers – you name it.
The Rhythm & Hues story is typical in a second way – when companies flounder, it means loss of jobs. As the Tribune explains, employees who have been let go will enter a business environment that offers less and less security. And, as I’ve noted many times, job layoffs and personal bankruptcy, both bankruptcy Chapter 7 and cases filed under Chapter 13 bankruptcy law, are related, with job layoffs being one of the three leading causes of bankruptcy in Indiana.
Bankruptcy is a particularly bitter pill for any business owner to swallow. But, despite the fact that a business is suffering severe financial difficulties, there is a possibility it can survive if debt repayments can be reduced or postponed. Bankruptcy in Indiana then goes from being a sign of failure to a safety net and the chance for a fresh financial start and an opportunity to keep the “rhythm and hues” going!
Categorised in: Bankruptcy Indiana
This post was written by Mark Zuckerberg