Twisted Root Burger was a Texas success story, expanding from one casual restaurant in 2006 to 24 sites including restaurants, bars, a brewery and a theater. Now, the company is moving fast in another direction — into bankruptcy, the Wall Street Journal reported. The chain shut down in March. Some sites reopened in June only to be shut down again as coronavirus cases surged. “I’m not gonna open that restaurant at half the revenue,” said co-founder Jason Boso. “I’m gonna walk away from those restaurants. I’m not gonna set myself up for failure.” Boso isn’t giving up though. Instead, his decision to put five of the restaurants into bankruptcy is a strategic move to keep control. The 47-year-old entrepreneur is one of the early adopters of a new law that makes it far faster, easier and more advantageous for struggling small-business owners to file for chapter 11. He expects to cut his liabilities by $500,000 and continue to operate the five restaurants that filed for bankruptcy. Bankruptcy lawyers expect a surge in small-business failures in the coming months. The new law, they say, will make many business owners realize that filing for bankruptcy might be a better option than struggling for years to dig out of a financial hole, especially with the outlook so unpredictable. The new rules give small businesses options that make it easier to file for chapter 11, providing them more leverage to renegotiate leases and debts while continuing to operate, often under the same ownership. The Small Business Reorganization Act took effect in February, and in March the coronavirus stimulus law known as the Cares Act temporarily expanded eligibility to businesses with $7.5 million or less in liabilities. Since the first full week the law was in effect, overall bankruptcies are down compared with last year, but there has been a recent bounce in small businesses filing under the new rules. Total weekly filings during that period have fallen 32 percent from 2019, according to a report prepared by the American Bankruptcy Institute on weekly filing statistics. The reasons are likely federal stimulus and grace periods on rent and other payments, according to ABI Executive Director Amy Quackenboss. “I do think there is going to be a surge,” Quackenboss said. More than 500 companies filed for bankruptcy under the small-business bankruptcy rules since February, according to the American Bankruptcy Institute. June was the top month for filings with 131 cases; many were filed in states hit hard by the pandemic like Florida, Texas, California, New York and Illinois.
