Chapter 13 Bankruptcy: Individuals

Chapter 13 is a repayment bankruptcy.  It is utilized by individuals, and owners of sole proprietorships or other “mom and pop” businesses, not only to obtain a fresh start, but also to retain their assets and reorganize their financial affairs.
For most individuals with debt problems, the major decision is whether to file for protection [...]

Chapter 11 Bankruptcy: Businesses and Individuals

Chapter 11 bankruptcy is a reorganization. More businesses than individuals file for Chapter 11; it is an orderly process that allows the debtor time and space to reorganize its financial affairs and repay its creditors some or all of the debt owed.
It is a vehicle through which debtors can reject or cancel certain leases, [...]

Chapter 7 Bankruptcy: Businesses & Individuals

The word”bankruptcy” is heard everywhere, from coffee shops to church bazaars and the evening news. It’s clear to me that, despite this general knowledge of bankruptcy, few people understand what it means to file for protection under Chapter 7, Chapter 11 or Chapter 13.
Chapter 7 is a liquidating bankruptcy.  It is normally utilized to [...]

Epicentre Contractors Turn to Bankruptcy

Contracting has always been a tough business. Subcontractors often make payroll and provide supplies and labor to a project months before they are paid by the general contractor or owner.
In the case of Charlotte’s Epicentre, a stop work order strangled cash flow for both the developer and the contractors. We’re still seeing clients whose financial [...]

Failure Can Teach Success

The Kauffman Foundation just published a study of 549 company founders of successful businesses in high-growth industries.
I zeroed in on this finding: “40 percent cited lessons learned from failures as extremely important – the second-highest “extremely important” rating.”
Lessons from forty years in bankruptcy court
After forty years of practicing law I can validate Kauffman’s findings. I [...]

Surviving USAirways Layoffs & Furloughs

Charlotte has fared better than other cities at the hands of USAirways, but it hasn’t been easy for those who’ve been laid off, furloughed or left doing the work of their former coworkers.
CEO Doug Parker says analysts predict the airline will lose $600 million this year and obviously such losses are untenable. Management will continue [...]

Speaking on Business Bankruptcy

Unfortunately, lawyers have a reputation for being “all about the money.”  Few people realize the pro bono (free) work so many of us do for those unable to pay.  This week my partner Rick Mitchell and I will be speaking (for FREE) in Charlotte on business bankruptcy for NC LEAP , the premier provider of [...]

Small Business Separation Issues

Small business owners often say that they think of their business as their “baby.” This metaphor works when you consider the incubation, care and feeding that a business requires of its owner — sometimes 24×7.
But when it’s time to prepare a bankruptcy filing, it’s time to separate the business from its owner to determine who [...]

Lessons from Reader’s Digest

Reader’s Digest just announced that it is filing a prepackaged Chapter 11 bankruptcy case.  Its goal is to reduce its debt to one-fourth of the present level ($2.2 billion).  The company is essentially using Federal bankruptcy law as a financial planning tool.
At the present level of debt, Reader’s Digest is not a viable company.  At [...]

Moving Through the Python, Bankruptcy Cycles

Today’s economy is force-feeding the bankruptcy python: developers who can’t pay their subcontractors force the subs into bankruptcy. Most small contractors and subcontractors are owned by individuals who guaranteed the business’s debts and will eventually seek personal bankruptcy protection. Bankruptcies always come in waves.

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