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Popular sandwich shop files for Chapter 7

Bad news for sandwich lovers -- a popular sandwich shop has unexpectedly closed its doors, citing unmanageable debt. South Carolina residents who frequent the West Coast might already know the name Paseo, which operated two locations in a prominent U.S. city. The company shut down both locations on Nov. 13 and filed for Chapter 7 bankruptcy the following day. 

The bankruptcy paperwork filed with a court local to the restaurant says that the company is struggling with approximately $30,000 worth of unsecured debt owed to a variety of creditors. Two major vendors own most of the debt at $10,000 each, and the rest is split between the IRS, current and former employees, and other small interests. In fact, several former employees have actually filed suit with the company because of overtime and vacation days not paid out. 

The company's physical assets, which are largely rooted in kitchen equipment and restaurant fixtures, are valued at approximately $82,000. However, the petition states that, after administrative fees are paid and exempt property is removed from the equation, there may not be enough left over to pay down existing unsecured creditors. Management will likely work closely with the bankruptcy court to come up with an alternative solution that will work for all parties involved. 

South Carolina residents are aware that a Chapter 7 bankruptcy filing can seem like a daunting step for a business owner to take. However, when faced with the prospect of having a business collapse under the weight of unsustainable debt, it can sometimes be the most financially responsible step that ownership can take. Liquidating company assets to pay down creditors is a good step toward financial stability in the long run.

Source: seattletimes.com, "Day after closing, Paseo files for bankruptcy", Lewis Kamb, Nov. 13, 2014

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