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Popular cupcake chain files for Chapter 11 bankruptcy

Building a business from the ground up is no small feat, and many California business owners face financial ups and downs along the way. Recovering from those downs can be difficult though, especially for businesses that have expanded to include franchises that span multiple states. In some of these cases, a Chapter 11 bankruptcy filing might be the most appropriate option.

Gigi's Cupcakes is a popular chain of cupcake stores that was originally founded by Gina Butler, a former singer-songwriter. After she realized her dreams of making it big in the music industry was less than realistic, Butler turned to cupcakes and never looked back. Butler later expanded her business through franchises and was bought out by a larger company, although she still runs the original location.

Amid multiple lawsuits from franchise owners and a loan for millions of dollars that cannot be repaid, the parent company for Gigi's Cupcakes recently filed for Chapter 11 bankruptcy. The company hopes that this process will not only be a good opportunity to resolve ongoing debt issues, but to also focus on rebranding the company and franchises in order to better meet its goals. Currently there are not any plans to close existing Gigi's Cupcakes locations.

Bankruptcy tends to make headlines when large companies are going out of business and shutting their doors for good, but this is far from the only use for this valuable process. Many California businesses use Chapter 11 to address their debt concerns while remaining open and ready for business. Although some owners might worry about potentially negative images associated with filing for bankruptcy, doing so can actually be an indication of a business's willingness to address its debt issues.

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