May 28, 2017

Chapter 11 or 13 for Troubled Businesses ?

This month news of an oil and gas producer filing for Chapter 11 bankruptcy protection made news. The reason cited for the financial difficulty is the drop in oil prices, which have have slid some 50 percent since June. My Chapter 11 clients own small to mid-sized businesses, but they have the same problems as bigger companies who need to reorganize under the orderly process of a bankruptcy … [Read more...]

Joint Liability for Debts: An FAQ

I am frequently asked whether spouses have joint liability for debts. This FAQ should help readers gain a basic understanding of the issues to consider, but is not a replacement for a qualified bankruptcy attorney's opinion on your specifics. Q: MY HUSBAND HAS SUBSTANTIAL DEBT THAT HE CANNOT PAY. HE NEEDS TO FILE BANKRUPTCY. DO I HAVE TO FILE WITH HIM? A: I have heard this quite often. One … [Read more...]

Attorneys Who Don’t Understand Bankruptcy’s Means Test: A Case Study

I was recently consulted by a highly-paid professional.  He was quite distraught over his financial plight that included debts of over $1,000,000.  He had consulted another attorney who had indicated to him that he was going to have difficulty filing a Chapter 7 bankruptcy case because of the amount of his income. He was at his wits end. I analyzed his situation. Two ways the Bankruptcy Code … [Read more...]

Bankruptcy Attorney: Advising Receivers

In my practice as a bankruptcy lawyer, I also have occasion to work on cases involving receivership and have advised receivers. It is important to note that a receiver must be a neutral third party, with no ties to or interest in the debtor or its business, or its creditors.  The court oversees the  receiver’s actions in accordance with the North Carolina statutes governing receiverships. Case … [Read more...]

Closing a Failed Business and Starting Another Like It

I have written this letter at various times to deal with the legal obstacles to closing an unprofitable business and getting a "fresh start" with another one. The primary legal obstacle is called "successor liability" [note]Dear (Business Owner): I understand that you have essentially been self-employed and wish to continue in the same line of work. I also understand that your present … [Read more...]

Reorganizing a Business with Chapter 11 Bankruptcy

My typical Chapter 11 client is a small to mid-sized, closely held and viable business with cash flow problems. The business offers either goods or services that are in demand,but needs to be reorganized in an orderly manner instead of haphazardly responding to creditor demands. The source of the financial problems varies; common problems include the decline of the housing market, growth and … [Read more...]

Commercial Foreclosure: When Can Lenders Foreclose?

I was quoted in The Charlotte Observer in 2009 regarding a $515 million luxury condo, office and retail project in Cornelius, NC that wass being foreclosed upon. Many people are surprised to learn that the developers hadn't missed payments.  Then why the foreclosure?  Because the project wasn't hitting agreed-upon milestones -- the developers hadn't leased enough of the space. This is what is … [Read more...]

Non-Monetary Default: A Potential Bankruptcy Time Bomb

Everyone knows that in the event payments are missed, there has been a default.  However, many business people overlook the fact that there can and often are other contract provisions that do not involve the payment of money which can trigger a default.  These are known as non-monetary defaults. Bank loan agreements, leases, and other types of commercial contracts provide for events of default … [Read more...]

Reorganizing a Small Business’s Finances

I frequently advise clients who own a small business and find themselves  unable to pay either their personal debts, or those of the company. Some of the company’s debts may be personally guaranteed by the individual owner(s). These clients often want to discuss filing a personal bankruptcy in order to deal with their own debts, and also want to file a bankruptcy for their business in order to … [Read more...]

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 obtain a “fresh start” for an individual debtor, and, far … [Read more...]