Minnesota Restaurant Industry given the OK to open, but many restrictions are still in place to help fight the spread of Covid-19.
The restaurant industry has not looked the same since COVID-19 caused a nationwide lockdown in March 2020. Since then, Minnesota restaurants had been given the green light to re-open for dining, then back to take-out only, now again partially open for indoor dining. Unfortunately, not all restaurants were able to survive this yo-yo of re-openings and closures caused by COVID-19.
Minnesota’s COVID-19 cases have started to decline since the peak in mid-November. According to MN Public Health, as of January 7, 2021, our 7-Day Rolling Average of Positive Tests is at 6.6%, which is considered a ‘cautious’ rate. This rate is significantly smaller than the reported 15.5% back on November 10, 2020, which is considered a ‘high risk’ rate.
On January 6, 2021, Governor Tim Walz lifted some of the restaurant and entertainment restrictions that were previously put in place on December 18, 2020. Starting January 10, 2021, indoor dining starts back up at 50% capacity, with no more than 6 people per table and only groups of 2 at the bar. Governor Walz has also implemented mandatory reservations and all dine-in service to end by 10 p.m. Restaurants are not the only ones with fewer restrictions. Movie theaters, gyms, bowling alleys, and museums may re-open at 25% capacity.
In the Twin Cities alone, over 94 restaurants have closed in 2020. The restaurant closures range from coffee shops to high-end seafood restaurants and everything in between. According to the National Restaurant Association, 17% of restaurants have closed in the U.S. due to COVID-19. This equates to the closure of 1 in every 6 restaurants; back in July, 4 in every 10 were predicted to close. Some restaurants have turned to filing for bankruptcy to get out of this pandemic as unscathed as possible. Corporate chains like Ruby Tuesday, California Pizza Kitchen, and Bar Louie have all filed for Chapter 11 Bankruptcy during the pandemic.
Typically, when a restaurant files for bankruptcy they must choose between filing under Chapter 7, Chapter 11, or Chapter 13. Under Chapter 7 all business operations must cease, the end goal being to liquidate the restaurant’s assets to pay off as many creditors as possible.
If filing under Chapter 11, almost all debts are suspended while the restaurant attempts to re-organize debt. Chapter 11 is the most popular filing for large or chain restaurants as they can sell off valuable assets and come back as a smaller, more cost-efficient business. The end goal is to become profitable again and pay off all or some of the debts owed.
If you are a restaurateur struggling to stay afloat amidst this pandemic and are questioning whether bankruptcy is the right option for you, contact Hoglund Law or call us at (651) 789-5052 for help. We offer a free 30–45-minute consultation with one of our Bankruptcy Attorneys who can help you find the right path to a debt-free financial future.