Chapter 11 could brew success for San Francisco brewery

On behalf of Macdonald Fernandez LLP posted in business and commercial bankruptcy on Wednesday, December 16, 2015.

Taking risks is essential when starting and running a business, and California business owners will face struggles throughout the process of starting and running a business. A well-known San Francisco brewery is working to manage risks by reorganizing its financial affairs.

The owner of Magnolia Brewery announced earlier this month that the company is filing for Chapter 11 bankruptcy. According to San Francisco Business Times, this bankruptcy filing is an example of how difficult it can be to own and grow a restaurantand brewing business in California. The food industry is notoriously risky, and the brewing industry has grown significantly since Magnolia Brewing opened in 1997.

Competition can thwart even a great business' growth. However, Magnolia Brewing has faith that Chapter 11 is best for its future. Chapter 11 allows for a reorganization of debt while a business continues its operations and strives to maximize a business' value and minimize its liabilities.

What does that mean for Magnolia Brewing's creditors, shareholders, employees and affiliates? There is a role for all stakeholders in a Chapter 11 reorganization, including filing and pursuing claims, serving on a creditors' committee and otherwise asserting your rights. Creditors are entitled to review a set of schedules disclosing the brewery's financial status in detail, to appear in court on important matters and to comment and vote upon a plan of reorganization.