To encourage small entrepreneurs, Town agrees to finance much of the purchase price. Firm s owner is confident that the taxi can generate enough to pay back Town and the creditors and still leave him with a healthy profit. There is an economic downturn, however, and the cab service is less popular than expected. As a result, Firm cannot meet its obligations to Town and the other creditors. It files a Chapter 11 petition.
Firm is insolvent.
The basic principles that should govern this bankruptcy can be stated briefly. Firm must continue to comply with all the rules governing taxis. Town might limit the operation of the cab to 12 hours a day. It might require replacement of any cab that is more than 5 years old. It might require installation of a partition between the front and back seats.