A Jiffy Lube franchise operator with 16 Jiffy Lube centers in Eastern Washington has filed for Chapter 11 bankruptcy protection so it may reorganize its debt, according to a news release.
Tri-Cities Fast Lubes Inc. of Santa Maria, Calif., has filed for the protection with the U.S. Bankruptcy Court of the Central District of California, said the Jan. 10 news release.
The company operates Jiffy Lube centers in Pasco, Richland, Kennewick and Walla Walla.
Chapter 11 is a legal mechanism for companies to gain time to restructure or reduce their debts while continuing day-to-day operations.
According to the release, the company voluntarily applied for Chapter 11 protection due to the "collapse of the credit markets and erosion of the overall economy."
A company in Chapter 11 continues to pay employees' salaries and benefits as well as to do business with suppliers and customers. A company leaves Chapter 11 after the court has approved a Chapter 11 plan of reorganization.
Bankruptcy law generally prohibits a company that has filed for Chapter 11 from paying for goods and services it received before it filed for Chapter 11 until the court has approved its reorganization plan.
The court-approved plan then dictates what creditors will receive.