Wednesday, April 29, 2020

COVID 19 and Bankruptcy; TOOJAY'S

As has been recently mentioned upon many news outlets, it appears the filings of bankruptcies has begun in Florida.  As of today, TOOJAY'S has filed for protection under Chapter 11.  This is a restaurant chain in Florida with $50M to $100M in assets, and their bankruptcy filing is a direct effect of the COVID 19 order shutting down restaurants.  While many restaurants, including Toojay's, offer To Go meals during the crisis, they are still struggling financially.  Even after restaurants are allowed to reopen in Florida, distancing guidelines and limitations on the number of customers allowed within establishments will limit income, and because of the continued Coronavirus threat, it is not clear how fast customers will return to eating in restaurants.  Also, many people, especially people now out of work, no longer have the disposable income they had prior to the COVID 19 event, and will no longer have the luxury of being able to eat out.

Even with emergency funding through the SBA, it appears there may be a title wave of Chapter 11 filings that will emerge in the near future.  It also appears there may be a large uptick in the filing of Chapter 7 bankruptcy filings from people that have lost their jobs, and are either re-employed in a lower paying job or remain unemployed for an extended period of time.

UPDATE: Florida Governor DeSantis just announced the reopening of restaurants with outdoor seating while observing social distancing, and inside limiting to 25% capacity.  This is for the reopening scheduled for May 4, 2020.  CDC guideline must continued to be observed.

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