SALEM, Va.

Liberty Medical Supply Inc., which has an operation in Salem, has filed for chapter 11 bankruptcy protection, according to CEO Frank Harvey.

"What that means is it gives us the breathing space we need to reorganize while still continuing to serve our patients and run our operations," Harvey said in a phone interview.

Liberty Medical announced in early December that it would lay off 200 workers. Two weeks later, the company announced a minimum 20 percent pay cut for employees. The layoffs take effect this month.

Harvey says the company has over 100 employees in Salem now, and Liberty Medical expects to stay at that level.

"Any time you have to lay off employees, and these are good people, you know its hard, but you have to make the right business decisions for the company in order for the company to survive," Harvey said.

According to court documents cited by the Chicago Tribune, Liberty Medical Supply Inc. lists assets and liabilities of between $100 million and $500 million.

Harvey cited companies like American Airlines, US Air, and General Motors that have gone through chapter 11.

"Its a business tool used by companies quite frequently when theyre facing issues that wouldnt allow them to be successful in the long term if they didnt address those," Harvey said. "(It) could be three to twelve months as we move through chapter 11, but were confident Liberty will come out on the other side stronger than ever."

Liberty Medical is based in Port St. Lucie, Fla.

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Liberty Medical files for chapter 11 bankruptcy