07/02/20
How long will we have to wait to visit the place “Where a Kid can be a Kid”. Chuck E. Cheese’s parent company, CEC Entertainment, has joined the list of companies that have filed Chapter 11 bankruptcy due to Covid-19. This is a huge blow to the place many kids once enjoyed visiting to not only have birthday parties, but also “live” entertainment. This news has brought to light one main concern: the days of Chuck E. Cheese are counted. The business model that made Chuck E. Cheese successful has been unable to adapt to the tech world we live in. Children are now more concerned with the world behind their devices than being able to ride an elevating bicycle.
To go more in depth, I want to talk about the difference between chapter 11 and chapter 7 bankruptcy. Chapter 11 is commonly used by corporations as it allows them to keep their assets and restructure their finances, including debt payments. A company is not forgiven its debt but is able to negotiate a new plan and is usually more expensive given its higher fees for attorneys and filings. Chapter 7 bankruptcy is one that is more commonly used by individuals because it allows them to have their debt forgiven. The trade off is that assets are liquidated in order to cover outstanding loans. To be eligible for this type of bankruptcy, individuals need to pass a “means test” that basically shows they do not have the income to repay their debts. It should be noted that both Chapter 11 and Chapter 7 bankruptcies remain on your credit report for 10 years.
So why bother learning about this? Bankruptcy is predominant among marginalized communities and it all stems due to a lack of a financial literacy education. Building Blocks for Kids is a non profit organization that seeks to end generational poverty by teaching the youth the financial skills sets to be independent and responsible individuals. The MORE program offers two different curriculum aimed at engaging with high school students through assignments on topics like banking, investing, taxes, insurance, home ownership, credit and exploring careers in many distinct industries. Along the way, students are able to win real money that is stored in a bank account they have access to once they graduate. We give them the tools, the students learn to use them.
Kevin Longoria is a summer intern for Building Blocks for Kids who attends Stanford University. He is interested in pursuing a career in investment banking and one day have a non profit organization of his own. He identifies as a first generation, low income Latino student passionate about helping others, especially under served communities.
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Image source: https://www.csbj.com/2020/05/01/covid-19-crisis-bankruptcy-looms-for-businesses/