Businesses in Kentucky and around the country have options if they run into financial trouble. Recently, a space company filed for Chapter 11 so it could start over.
What is Chapter 11 bankruptcy?
Chapter 11 is an option available to businesses that are struggling financially. It gives the business the chance to reorganize their finances by addressing assets and debts so that the company can make a fresh start. Instead of closing its doors while dealing with these and other financial issues, the company can remain open and conduct business as usual while going through the bankruptcy.
Which company recently filed for Chapter 11 bankruptcy?
A space company known as Masten Space Systems filed for Chapter 11 bankruptcy in July 2022. The move came after the company was forced to lay off and furlough some of its employees due to financial difficulties. It claimed that a contract award from NASA caused business debt to increase dramatically. The contract led to Masten going well over its budget and struggling to pay its employees.
Masten is one of the older space companies around, but it’s had competition since it was founded in 2004. The NASA contract caused enough debt that the company attempted to raise as much as $60 million in outside capital. Before that time, Masten was unable to raise cash other than from angel investors, but that was in small amounts. After a period of time, things got to be difficult with the company struggling financially.
By June 2021, Masten laid off 20 employees. With between 50 and 99 creditors, it was a challenge to pay back business debts, which is what led to the company filing for Chapter 11 bankruptcy. Although several of its staff members have been furloughed, the company hopes to be able to bring them back at some point.
The company issued a statement about the reason behind the Chapter 11 filing. It hopes to be able to reorganize its finances while continuing to run regular daily operations and sales to pay back its creditors. The hope is that the bankruptcy case will move fast enough so that the business can start anew.