In the Tampa Bay region, Chapter 11 reorganisations are facing a striking new challenge. The regular process of restructuring debts and giving companies a fresh start is increasingly being replaced by rushed asset sales or near-immediate ownership transfers. According to Ryan Reinert—a creditors’ rights attorney and partner at Shutts & Bowen LLP in Tampa—this shift is happening because many businesses simply don’t have the runway to execute the textbook turnaround.
Distress Is Accelerating the Exit
Reinert points out that even companies which may have underlying viability often resort to fast exits because the financing necessary to refinance debt or fund capital improvements just isn’t available. New money is expensive, he says, making the standard Chapter 11 exit increasingly impractical.
“It’s difficult, especially if you were already in a distressed state. The pricing on new money is very expensive,” he explained.
Well-meaning turnarounds are hamstrung when companies can’t secure affordable capital, leading them to sell their assets while in Chapter 11 rather than reorganise over time.
Restaurant Operators Illustrate the Trend
One concrete example: a major south Florida franchisee of Wendy’s, which operated more than 60 locations including several in Tampa Bay, initially aimed to reorganise under Chapter 11 but ended up selling all its restaurants last year. The driver? Post-pandemic shifts in consumer spending, inflation, and high interest rates on its $50 million debt load. As Reinert notes:
“Restaurant cases are tough to turn around… there are less people out spending money on that type of expense.”
He’s seeing similar patterns in sectors beyond dining — from construction and home-building to business services and transportation.
A Growing Wave of Bankruptcies
Local filings reflect a broader shift: business bankruptcies of all types have surpassed pandemic-era levels, and Chapter 11 filings recently hit a decade high, up nearly 50 % year-over-year at the end of June. That surge signals enhanced economic uncertainty among consumers and businesses alike. The rising tide of filings is making traditional reorganisations less viable and making sales or liquidations more common exit paths.
Post-Reorganisation Sales Are Increasing
Intriguingly, even companies that successfully complete a Chapter 11 reorganisation may not be staying independent for long. For instance, the family-owned drinkware brand Tervis—with deep Tampa Bay roots—took a $5.5 million loan from its owners to complete its reorganisation, after previously lending $19 million over four years. Six months later, the owners sold a majority stake in the company, effectively ending decades of family ownership.
Reinert’s observation: once companies navigate Chapter 11, they’re often steered toward a sale or ownership change soon after.
Why This Matters for Business Stakeholders
For lenders, investors, and business owners in Tampa Bay: the message is clear—traditional Chapter 11 reorganisations may no longer be the default route for distressed businesses. Liquidations, asset sales, and early ownership shifts are now more common. Firms that delay action run the risk of limited options or diminished value when forced into a quick exit.
The Role of Interest Rates and Timing
Although the Federal Reserve has cut rates by a quarter point and may make further cuts later this year, Reinert cautions that the impact will take time to materialise. The current elevated cost of capital remains a very much live issue for companies trying to restructure.
“We’ve started to see some relief with the first cut, but that takes time,” he noted.
Until that relief filters through, many firms are choosing quicker exits over drawn-out reorganisations.
If you’re a business owner, investor, or creditor in the Tampa Bay area, it may be time to rethink your outlook on distressed companies—what was once a path to recovery is increasingly a race to salvage value. The next wave of restructuring might look very different than the last.
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