In October, Friendly’s restaurants filed for bankruptcy protection, closing about 100 of its 500 locations scattered along and slightly inland of the East Coast. Now emerged from bankruptcy court, sources note that the restaurant has shifted its focus toward ice cream products designed for distribution to grocery retailers, and is seeing positive results.

Here’s a look at the details of that shift and what individual bankruptcy filers can learn from it:

• This year, Friendly’s introduced branded ice cream products into 2,400 Walmart locations, 300 A&P and Pathmark supermarkets, 200 Food Lion stores, 178 Giant Food outlets, 70 Target locations, and others. In total, Friendly’s increased its supermarket presence by 40 percent.
• At present, Friendly’s already outsells national competitors (including Breyers, Edy’s, and Turkey Hill) in some New England stores.
• Last year, the Friendly’s ice cream cake manufacturing plant produced 1 million cakes for distribution, up from 300,000 a few years before.
• The chain’s Executive VP of Retail Financing has noted on the record that he would like to double the chain’s supermarket presence in the next three to five years.

Adjusting to the Times after Bankruptcy

Analysts have noted that the restaurant industry was one of the hardest hit by the recession. Since the crash of the housing market, Americans have been eating out less often and less lavishly—meaning, in some cases, that diners are skipping appetizers and dessert when they did go out for a meal.

For Friendly’s, this translated to a serious decrease in what had once been its bread and butter: in-restaurant sales of ice cream products. Even as Americans’ consumption of ice cream in restaurants decreased in recent years, though, our ice cream eating at home rose significantly.

Friendly’s made the difficult decision to shift its long-time focus on restaurant ice cream sales to the potentially more lucrative grocery store sales. Why difficult? Because in order to produce the quality and quantity of ice cream demanded by grocery store customers, Friendly’s had to overhaul its factories, which reportedly cost several million dollars.

The expense may have contributed to the company’s need for bankruptcy protection, but it also paved the way for success following its bankruptcy discharge. Now, Friendly’s is on the road to recovery thanks to its in-store sales of ice cream products.

Here’s how you can make Friendly’s bankruptcy maneuvers work for you:

• Think long-term. We usually know what financial decisions will make the most sense for us in the long term, but we’re often pressured to make other decisions. Ultimately, choices made with the long view in mind will pay off… in the long run.
• Don’t fear bankruptcy. Done right, bankruptcy allows individuals and companies shed debt and emerge healthier, stronger, and able to get ahead financially.
• Mind the times. Things that worked for you last year or ten years ago may not work today. The sooner you accept that and adjust your finances accordingly, the easier your transition out of bankruptcy is likely to be.

An Atlanta-area bookstore surprised its fans last week when it filed for Chapter 7 bankruptcy protection to deal with its $508,673 in debts. At the time of the filing, it seems, Outwrite Bookstore had less than $300 in its checking account, a circumstance that underscored the dire financial straits the bookstore found itself in.

Part of a Larger Trend

While Outwrite’s Chapter 7 filing in particular came as a surprise (the bookstore had admitted financial troubles in recent months, but had apparently held a fundraiser to help with relocation costs even as it was paying a bankruptcy lawyer to help it draw up plans for winding down), its place in the grand scheme of booksellers these days is nothing new.

With online giants like Amazon underselling most of its competition, many independent (and even not-so-independent, ahem, Borders) brick-and-mortar sellers have felt a serious strain.

Individual Chapter 7 vs. Business Chapter 7

When Outwrite filed its Chapter 7 petition, the bookstore cited only $78,311 in assets, compared with its debts exceeding $500,000. Most of those assets, it seems, took the form of office supplies and inventory the store still had on hand.

It’s not entirely uncommon to see individual Chapter 7 bankruptcy cases with similar disparities in debt and assets. Here’s why Chapter 7 bankruptcy tends to work well for those with few assets to their name:

• Chapter 7 bankruptcy offers a full discharge of certain debts, meaning that filers are not required to repay those debts. For a business like Outwrite, choosing Chapter 7 makes sense when there’s no clear way to earn the money needed to repay creditors. For individuals, Chapter 7 can provide relief from debts that are unrealistically higher than a filer’s income (such as exorbitant medical bills or credit card debts).
• Filers can keep their necessities. Chapter 7 bankruptcy is a form of protection, not punishment. Filers are granted several “exemptions,” which outline property a filer can keep in order to make a fresh financial start after the bankruptcy case is finished. Any property or assets that the court deems unnecessary to reasonably make a living may be sold in a liquidation sale.
• Chapter 7 offers relief from creditors. Chapter 7 filers enjoy the legal protection of the automatic stay during their bankruptcy cases. This stay prevents creditors from taking any collection actions against them. Once a debt is discharged in bankruptcy, creditors have no legal claim to it, and cannot rightly take collection action.
• Chapter 7 moves quickly. In a matter of months, filers can complete the bankruptcy process and restart their lives uninhibited by the debts of their past. In their lives after bankruptcy, filers are free to rebuild their wealth.